Shares in TWE lift from 2020 lows

By Nicki Bourlioufas

Shares in Australia’s largest listed wine producer Treasury Wine Estates (TWE) have lifted from their 2020 lows on speculation the company will sell its famous Penfolds division, rumours which have been denied by the company.

TWE said this week it has “formally paused work on a potential demerger of its Penfolds brand, and further that it is not currently considering a demerger of any brands/businesses within its portfolio.”

TWE said it is “is assessing internal operating models to deliver long term value through a separate focus across its brand portfolios. These assessments remain ongoing and TWE has no further announcements to make at this stage.”

The announcement follows speculation in recent months regarding a demerger of TWE’s most valuable brand, including a report in a 7 February article in The Australian that Treasury Wines was investigating a demerger of its global operations into three separate businesses.

TWE shares have rebounded from their 2020 lows after China’s slapped anti-dumping tariffs on the company.

TWE shares have recovered to over $10 this month, closing at $10.15 on 12 February, also buoyed by greater confidence that it can redirect wine exports away from China to the US and other European nations. TWE shares fell to around $7.87 on 5 November 2020, their lowest level since January 2016, according to Bloomberg data. This was dramatically down on their late 2019 high of $19.20.

The company in November was hit with a temporarily 169% tariff on its wine exports to China. TWE said it would implement a series of plans to reduce the impact of temporary anti-dumping measures, as announced by the Chinese Ministry of Commerce (MOFCOM) on 27 November 2020. The Chinese government claimed local wine producers had sustained “substantive” damage from Australian wine dumping. Australian winemakers face temporary tariffs of between 107.1% and 212.1% on exports. The tariffs will be in place for up to four months, or until late March, though the period may be extended to nine months (28 August 2021).

TWE owns Australia’s most iconic wine, Penfolds Grange


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