Foster's Group posts 4.5 pct half-year profit rise

SYDNEY, Australia - Australian brewer and winemaker Foster's Group Ltd. reported Tuesday that its profit rose 4.5 percent in the first half of the current fiscal year over the same period a year earlier to 411 million Australian dollars ($267 million).

The Melbourne-based global company also announced that it will retain its troubled wine business following an internal review as it aims to trim annual operating costs by more than AU$100 million ($65 million) within two years through selling vineyards and other noncore assets, it told the Australian Securities Exchange.

The profit increase coincided with a 13.2 percent increase in operating cash flow to AU$692 million ($450 million) for the same six months through December 2008.

Foster's plans to sell 36 noncore vineyards, with three wineries to be closed, reconfigured or consolidated in Australia and California.

It expects to book total asset writedowns and restructuring charges between AU$330 million ($214 million) and AU$415 million ($270 million) in the last half of the fiscal year through June.

"In the face of very unique global trading conditions, our balance sheet is strong, our medium term funding is secure and we continue to generate outstanding operating cash flows," chief executive officer Ian Johnston said in a statement.

Wine sale volumes in Asia and the Pacific were below the prior year and impacted by the economic recession in some key markets.

"Deteriorating global trading conditions are a challenge in wine," Johnston said.

"Our ability to win share gains in key market segments in the Americas and the UK and our improved performance in Australian bottled wine gives me real confidence in the future," he added.

In the last fiscal year ending June 30, 2008, Foster's reported an 88 percent profit slump due in part to large writedowns in its wine operations.

The recently completed review of the wine business was announced in June last year after the former chief executive officer Trevor O'Hoy resigned. He had been appointed in 2004.

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