AUS: Beer revamp boosts Foster's earnings
Foster's Group has today (29 August) posted a 27% leap in full-year profits thanks largely to gains from the sale of its Asian brewing operations and rights to the Foster's lager brand in Europe and India.
The Australian drinks giant posted net profit of A$1.2bn (US$916m) on the back of a 24% rise in net sales to A$4.9bn. However, Foster's CEO Trevor O'Hoy said revenue growth from the company's wine business had been "disappointing".
Foster's said it had received over A$1bn from the sale of its flagship lager brand overseas and its decision to offload its international brewing operations. Its domestic brewing arm, Carlton & United Breweries, reported a 17% rise in earnings thanks to increased volumes and efficiency gains.
The company's wine business posted rising profits a year after it bought Australian wine group Southcorp. A series of streamlining measures, including the sale of four wineries in Australia and one in France, as Foster's integrated the Southcorp business, drove an 82% leap in net profit to A$431m from the company's wine business.
However, O'Hoy said: "Our global wine business faced challenges during the period and revenue growth was disappointing. While our focus on integration and synergies created some distraction, innovation is now firmly at the top of the agenda."
Foster's today signalled its desire to revamp its wine portfolio with the relaunch of Rosemount, a key former Southcorp brand, and the introduction of the Lindemans Country of Origin range.
The company also announced that it will sell its wine clubs business after deciding it did not have a future under Foster's new remit as a "consumer-led, customer-driven drinks company".
Foster's forecast a mixed global outlook for its wine business. The company admitted it expected its domestic wine market to be "very competitive" due to the wine glut in Australia. Foster's said the UK wine market would remain competitive but hoped a stronger local sales network would boost sales.
However, Foster's hinted at greater confidence in the US wine market, where it expects "value growth to remain strong".
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