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Beer shines for Foster's
Aug 26 11:15
Giles Parkinson

Beer and wine giant Foster's Group on Tuesday announced a 17 per cent fall in net profit to $463 million for 2002/03 after taking a $105 million hit for restructuring its Australian beer division.

The writedown, mostly for the closure of its Kent brewery and redundancy costs, overshadowed a strong result for the Australian brewing division and a slowdown in the company's recent growth engine - the wine division.

The Australian beer division was the group's star performer, lifting earnings before interest and tax and amortisation by 7.6 per cent to $463.1 million. It also underpinned a 9.8 per cent lift in the group's operating cash flow to $696.5 million.

The Beringer Blass wine division, which had driven much of the group's profit growth in recent years, recorded a 3.1 per cent fall in earnings to $428.8 million.



Chief executive Ted Kunkel said this was the result of poor economic conditions and intense competition in the US, the rising Australian dollar.

He said the outlook for the division in the current year is mixed, with tough conditions in the US likely to weigh on double digit growth from Europe and the Asia-Pacific region.

He also dismissed suggestions the group was interested in buying the struggling Southcorp wine business, saying instead the company would look at reducing debt or returning money to shareholders.

The Australian Leisure and Hospitality division, which is to be sold for about $1.4 billion, returned an EBITAS of $122.3 million, defying some forecasts of a fall in earnings in the past year.

The division, the largest hotel owner and operator in Australia, is to be split in two, with one arm to be listed on the Australian Stock Exchange.

Foster's overall net profit fell to $462.9 million, but Mr Kunkel said the group's net profit, excluding various accounting items, rose 9.1 per cent to $626.7 million. Normalised earnings per share rose .7.8 per cent to 30.4¢.

"Foster's believes markets will remain challenging in fiscal 2004 and consequently expects normalised EPS growth will be similar to the year just completed," the company said in a statement.

The group's final dividend was lifted to 10.5¢ fully franked, from 9.5¢. Revenue rose 1.5 per cent to A$5.24 billion.