AUS: Foster's Group H1 takes weather beating, demerger date set
- H1 net profits slip by 7.5%
- Sales down by 6.6%, volumes dip by 5.3%
- Beer/wine demerger set for May
Foster's Group will cease to be come May, but Foster's will live on in beer
Foster's Group has posted a marked dip in net profits in its fiscal first half, and has confirmed specific plans for its long-mooted demerger.
The Australian beer and wine group said early today (15 February) that net profits for the six months to the end of December came in 7.5% down on a reported basis versus the same period a year earlier, at AUD335.7m (US$336.6m). Net sales also fell, by 6.6% on a reported basis, to AUD2.15bn, with volumes down by 5.3% to 75.8m nine-litre cases.
The beer unit, Carlton & United Breweries (CUB), noted a “significant decline” in the Australian beer market in the six-month period, with poor weather in the country and “unusually high beer market volume in the prior year” also hindering performance. Volumes in Australia fell by 5.8% in the half-year.
Meanwhile, Treasury Wine Estates (TWE), Foster's wine division, boasted that its policy of premiumisation is “driving constant currency revenue per case growth”, although Australian exports were being impacted by a strong Australian dollar. Reported volumes at TWE were down by 5.9%, but earnings before interest and taxes (EBITS) inched up on a reported basis by 0.7% to AUD99.9m.
Looking forward, Foster's said it expects beer market volume declines to moderate in the second half of its fiscal year, to between 3% and 4% below a year earlier. “Key international wine markets are expected to remain challenging but with some modest improvement in the consumer environment continuing,” Foster's noted.
On the demerger front, CUB will change its name to Foster's, with both the beer unit and TWE set to list on the Australian Stock Exchange. Each will have separate boards and management teams, with eligible shareholders set to receive one share in the new ASX-listed TWE for every three Foster’s shares held. Foster’s shareholders will also retain their shareholding in Foster’s.
“The demerger recognises the different business characteristics of, and industry dynamics now faced by, each business,” said group CEO Ian Johnston. “Following the demerger, Foster’s and Treasury Wine Estates … will be able to focus solely on their own business and strategic objectives, providing greater flexibility to respond to challenges and pursue opportunities.”
The split is expected to complete in May, dependent on shareholder and court approvals.
To read Foster's official results release, click here.
To read the official statement on the demerger, click here.
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