Foster’s tightens its belt
In its half-year results, published today, Foster’s Group Limited weathered the economic storm of unfavourable exchange rates and flagging international sales, reporting a net profit of $363 million and earnings per share of 18.8 cents.
Overseas, Foster’s was hit hard in the wine market by oversupply and decreased consumption, as well as losing over $80 million on exchange rates alone. “Adjusting for currency the key contributor to the decline in wine earnings was recessionary conditions in Americas. Wine consumers have reduced discretionary spending, on premise channels have shown decline, and global over-supply of wine is prompting clearance-level discounting,” said Chief Executive Officer Ian Johnston.
However, a 6.6% improvement in Australian profits for Carlton & United Breweries, as well as a leading portfolio of Australian wines, allowed the company to rally. “Our wine performance has been good in a very tough domestic Australian market – with improved performance from our core labels such as Penfolds, Lindemans, Wolf Blass and Yellowglen,” Mr Johnston reported.
In addition, Foster’s previously announced cost reduction program delivered around $35 million of benefits. According to Mr Johnston, “We are delivering on our commitments, with the separation of our wine and beer sales force; rationalisation of the non core Australian wine tail brands; sale of non essential vineyards; and delivery of cost savings to plan.”