Penfolds owner Treasury Wine Estates fell into the red in 2025/26, with a huge bottom-line net loss of $1.1 billion.
The result reflected big one-off items, including a $1.3 billion after-tax writedowns of the value of its US-based assets, for the year ended June 30.
A year ago, it made a profit of $437 million.
Underlying earnings were also disappointing, coming in at $492.3 million - a drop of 36 per cent - although it was ahead of the company's guidance and driven by the performance of its flagship brand.
Chief executive Sam Fischer said 2025/26 marked a major reset of the business as it fought parallel import 'grey market' activity in China, which had hurt the Penfolds brand, and dealt with inventory issues across the portfolio.
"We took decisive action to ensure the health of our brands and channels and commenced our transformation program ... focused on reshaping TWE for future success," he told an earnings call.
"While this decisive action has impacted financial performance in the short term, I am confident we'll emerge as a more focused and financially strong company capable of sustained attractive returns."
Treasury Wine shares rose by more than one per cent ahead of lunchtime to $5.57 apiece, which was its best showing in more than eight months.
Mr Fischer played up the prospects of its Penfolds wine offering, saying it continued to be a brand "that transcends the wine category", after delivering its own underlying earnings boost of 15.2 per cent to $404.3 million.
In contrast, the underlying earnings of the US business came to $90.2 million.
The Penfolds result followed strong "depletions" growth in China, Asia and Australia.
Depletions refer to the volume of wine sold by distributors directly to the end consumer and are a measure of actual demand, as opposed to shipments.
Soft depletions mean consumers are purchasing less wine than anticipated, while growing depletions mean the opposite.
"It is terrific to see the continued progress Penfolds is making across its key markets," Mr Fischer said.
However, the division's earnings were moderated by inventory cuts and shipment restrictions to stop parallel import activity into China.
Asked about the company's decision to cut shipments of Penfolds medium- to full-bodied Bin 407 Cabernet Sauvignon to China, Mr Fischer said he wasn't getting the pricing he wanted because of unauthorised cross-border trade.
He also wanted to show "everyone in the trade across the region how serious we are in relation to taking control of our route to market in China".
In June, Treasury Wine announced it would cut its wine brand offering to 30, down from 70, across multiple markets while emphasising its top 10 "power" brands.
The power segment, which includes Penfolds, California brand Daou and New Zealand heavyweight Matua, contributes 72 per cent of gross profit on 25 per cent of the listed company's wine volume.
Treasury Wine's luxury red wines, including blends, cabernet, shiraz and pinot noir, already do well across China, the rest of Asia and Australia.
The story is the same for its luxury whites, including chardonnay, sauvignon blanc and sparkling wines produced under the Penfolds Yattarna, Frank Family and Doau brands.
"We're seeing real momentum in white wine through female consumption and refreshment occasions," Mr Fischer said, adding the segment was going to be a significant driver of growth.
In December, Treasury Wine wrote down the value of the US business, after spending $1.6 billion in 2023 to buy Daou Vineyards, which produces wine between $US20 and $US500 a bottle.
