AUSTRALIA: Foster’s wine business affects rating

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Goldman Sachs JBWere's short-term recommendation on Foster's Group has been downgraded from "outperform" to "marketperform" due to concerns about the company's wine business outlook.

The drinks company retained its long-term "buy" recommendation today (15 February) after vowing to cut wine production costs and increase distribution scale to accelerate earnings per share growth.

Foster's Group first half net profit tumbled 62.4% this year, down to A$291.1m (US$214.4m) from A$773.5m in the same period last year. This is largely due to the prior period's A$471.1m sale of the company's property division.

The broker also lowered its fiscal 2006 net profit forecast for Foster's by 1.6%, to A$609.3m.

Sectors: Beer & cider, Wine

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