>Foster's has forecast a flat half-year profit for 2003 and blamed the US wine market.

While domestic beer sales helped to offset poor conditions in the North American wine business, the company warned that the difficult economic conditions will continue throughout the year. Weaker margins in the US, thanks to an economic downturn and grape glut have led to greater competition from cut-price wine.

"We have not as yet seen any noticeable recovery in this market and the factors adversely affecting second-half 2002/03 margins, namely product mix, higher costs and increased promotional expenditure, have influenced performance in the first months of 2003/04," Foster's chief executive Ted Kunkel told Reuters.

The company expects to generate gross proceeds of A$1.4 billion (US$979m) following the floatation of its Australian Leisure and Hospitality pubs arm. Fosters plans to return funds to shareholders and said it might buy back as much as 10% of issued capital, or up to 200m shares. More details would be announced in mid-November.