foster's revels in robust beer market

UPDATE:Cynthia Koons | August 25, 2009
Article from: Dow Jones Newswires
FOSTER'S Group said full-year net profit increased nearly fourfold and the beer market was robust, but wine remained challenging.

Play

Advertisement. Your video will begin in 3 seconds.
12345Loading…Please login to rate a video.(2 votes)You can't rate an advertisement.
(2 votes)

Trading Day - August 25The Australian's Andrew Main on Woolies' hardware bid and Foster's result. Sky NewsViews today: 140Sorry, this video is no longer available.
The profit growth in fiscal 2009 came off a previous year in which the beverage maker had taken substantial writedowns on its wine business.

Foster’s Group booked writedowns on the troublesome wine business in the year ended June 30 as well, albeit not as many charges as in the prior year.

The company said in February it would restructure its wine business after failing to sell it and flagged up to $415 million of potential writedowns as a result. The writedowns for the year ended June 30 totalled $397.6m, compared to $602.9m of writedowns in the prior year.

For fiscal 2009, net profit was $438.3m, compared to $111.7m the year before. Analysts had expected Foster's to report earnings of $424.6m, according to a Dow Jones Newswires poll. Before the writedowns, the
Foster’s reported earnings of $741.5m.

Analysts have been looking for signs that the wine business was starting to improve, but Foster's said conditions in key wine markets remained challenging in the latest financial year due to economic conditions.

Foster's said it had reduced customer inventories and reshaped its portfolio in 2009 and that it was "well placed" for an economic rebound.

As for its beer business, which analysts called its "saving grace" in fiscal 2008, Foster's said today the Australian market remained "very robust".

It has been thought that the beer market has been inadvertently supported by a government tax on other alcoholic drinks, specifically ready-to-drink beverages that mix spirits with sodas and other flavours.

That tax, which came into effect in May 2008 in a bid to combat teenage binge drinking, made beer a cheaper alternative. Analysts have expressed concern that the beer market's growth over the past year could be attributable to that and is therefore unsustainable at its recent pace.

Foster's revenue was $4.49bn, up from $4.37bn last year.

The company will pay a final dividend of 15.25 cents a share, up from 14.25c last year.