Treasury Wines will book an impairment charge of up to $260 million in fiscal 2014 as it looks to draw a line under a troubled 12 months with a new business model.
The charge is the latest in a long string of writedowns at Treasury Wine and the former wine business of Fosters Group, after the company overpaid for assets at the top of the market.
Treasury Wine said it will restructure its Australian business to separate its luxury and masstige wines from the commercial wines, and will also boost consumer marketing.
The winemaker said the non-cash brand and related asset-impairment charge reflected both high historical prices paid for pre-demerger acquisitions and the decline in market growth rates for wine globally.
Treasury Wine last month knocked back a takeover offer from private equity giant KKR worth some $3.05 billion, saying it was too low. There has been persistent speculation that the troubled winemaker remains a takeover target.
Treasury chief executive Michael Clarke, who has conducted an extensive review of the business since taking over as CEO earlier this year, said the impairment showed the company needs to do things differently and he hoped fiscal 2015 would be a "reset" year for the group.
"We have already taken significant steps to reset consumer marketing investment, our cost base and business model, and over the coming year we must fully realise the benefits of these changes," he said.
Last year, the winemaker announced writedowns of up to $160 million on excess stock held by US distributors. The charges including the cost of destroying six million bottles of out-of-date wine. Fosters had previously written down more than $2 billion related to acquisitions of Beringer and other wines.
Investors responded well to the news. At 10.15am (AEST) Treasury shares were 1.55 per cent higher at $4.905, against a benchmark index decline of 0.76 per cent. In earlier trade, the shares hit as high as $4.95.
Business restructure unveiled
Treasury said it will ramp up promotion of its wines, cut costs and change its business model as part of the restructure.
It will also combine the annual release dates for new vintages of its Penfolds Bin series and Penfolds Icon & Luxury collection wines to October.
Treasury will split its Australian commercial business, which includes Lindeman's and Annie's Lane, from its luxury and masstige portfolio which is home to Penfolds Grange.
It said moving the release of the Penfolds Bin Series and Icon & Luxury Collection wines to October, from March and May, would ensure the wines were on sale for longer.
The change will also help Treasury manage allocations and inventory levels with key customers around the world.
"An October release for Penfolds wines is fully supported by our winemaking teams," said Mr Clarke, who took on the top job in March.
"This change places the consumer at the heart of our business model with Penfolds wines now more readily available in the lead-up to key festive periods including Thanksgiving, Christmas, Chinese New Year and Easter."