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Australia's Foster's Second-Half Profit Rises 22%

Foster's Group, Australia's biggest alcoholic drinks company, said on Tuesday second-half net profit rose 22%, boosted by strong beer and international wine sales.

Net profit before one-offs for the six months to June 30 was A$353 million (US$292 million), compared to A$289.8 million a year ago, based on Reuters calculations.

Consensus analyst estimates pointed to second-half earnings of A$334.2 million, based on a Reuters survey of nine analysts.

Foster's, also the world's second-largest wine company, forecast strong earnings growth this year as it focuses on premium beer and wine sales, and said it planned to buy back shares.

"Foster's expects global volumes in fiscal 2008 to be similar to fiscal 2007 as portfolio focus shifts to growth in higher margin products, with planned reductions in cask wine volumes," the company said.

Analysts had expected a cautious outlook due to rising costs and volatility in the Australian dollar. The company makes around a quarter of its earnings from the United States.

Foster's said the result was also driven by growth of international wine sales. Foster's global wine business is ranked behind only U.S.-based Constellation Brands, and includes the Rosemount, Penfolds and Lindemans brands.

In Australian, beer sales were driven by a jump in sales of its new low-carbohydrate Pure Blonde label.

Boutique and mid-strength beers have been winning market share in Australia's A$5.5 billion beer industry, though the company's 113-year old VB (Victoria Bitter) brand is still the country's top-selling beer, with an 18% market share.

Foster's said net profit for the year to June 30 was A$716 million (US$592 million), compared to A$613 million a year earlier, compared to consensus estimates of A$696 million.

Foster's said it planned to buy back A$250 million of capital off market and A$100 million on market.

The group also announced the retirement of its Chief Financial Officer Pete Scott.

Foster's has struggled with a strategy to integrate its wine, beer and spirits sales teams from a previous system of specialized sales people, and earlier this year reintroduced wine specialists to boost sales to restaurants and fine wine stores.