Australia's Treasury Wine warns weak China demand to hit profits

SYDNEY, Jan 30 (Reuters) - Australia's Treasury Wine Estates Ltd TWE.AX , the maker of Penfolds and Beringer wines, downgraded its full year earnings guidance by almost a fifth on Thursday on weak demand in China and stiff competition in its home market.

The world's second largest wine maker said it expected operating earnings of between A$190 million to A$210 million (($166 million to $184 million), compared to its previous range of A$230 million to A$250 million.

Treasury Wines said it is still seeing signs that government austerity measures in China were impacting consumer demand for premium wine, while in Australia significant competition resulted in higher-than-expected volume declines.

Treasury Wine Estates said it does not expect to recover its first half shortfall, and expects challenges to continue in the second half.

The company in August posted a flat full-year profit after saying it would destroy some of its aged U.S. inventory.

($1 = 1.1425 Australian dollars)

(Reporting by Thuy Ong; Editing by Andrew Hay)

((thuy.ong@thomsonreuters.com)(+61 2 9373 1236)(Reuters Messaging: thuy.ong.thomsonreuters.com@reuters.net))

Keywords: AUSTRALIA TREASURYWINE/WARNING