E-Malt.com News article: Australia: Foster's profit growth loses fizz in the six months ended December 2007

Foster's Group Ltd, Australia's biggest alcoholic drinks company, posted its slowest growth in first-half net profit in several, as U.S. wine demand slowed and the strong dollar crimped earnings, Reuters reported February 18.

Foster's said net profit before one-offs for the six months to December 31 rose 6 percent to A$393.5 million ($361 million) from A$371.4 million, helped by a strong performance in Australia and Europe.

That beat market forecasts of A$384.5 million before one-offs, according to a Reuters survey of eight analysts, but was well below the double-digit pace of recent years and the 22 percent rise in the six months to June 2007.

Net profit after tax and including items fell 28 percent to A$398.6 million.

Foster's said Australian beer, wine and spirits earnings before interest and tax increased 9.4 percent to A$433.4 million, including a one-off gain of A$17.8 million on the sale of properties.

Earnings before interest and tax in the United States slumped by 32.2 percent to A$98.3 million, hurt by softer sales for Australian wine, increased input costs and a high Australian dollar that reduced earnings translated into local currency. In constant currency terms, earnings fell 11.9 percent.

In Australia, Foster's mainstream beers have come under pressure as consumers switch to higher-margin premium beers.

Foster's has a 50 percent share of Australia's beer market duopoly, but smaller rival Lion Nathan Ltd, which has a 42 percent share, has benefited from a focus on higher-margin premium beers, where total industry sales have jumped 12 percent.

Foster's shares have fallen 10 percent this year compared with 12 percent for the broader market . They fell 5.3 percent last year when the market rallied 11.8 percent.


20 February, 2008