Fosters profits fall 88 percent
SYDNEY, Australia: Brewer and winemaker Fosters Group Ltd. reported Tuesday an 88 percent fall in its annual profits but declined to provide guidance for the 2009 fiscal year while the Australian company conducts a strategic review of its troubled wine operations.
Fosters posted a net profit for the fiscal year ending June 30 of 111.7 million Australian dollars (US$96.5 million), declaring a final dividend of A14.25 cents (US$12.31) per share, fully franked.
The net result was affected by write downs of A$730.4 million (US$630.5 million) in its wine operations.
Fosters acting chief executive officer Ian Johnston said the company would provide no guidance for the 2009 year while it conducted a strategic review of its wine operations.
"Global trading conditions for wine continue to be competitive but the category remains in solid growth," Johnston said in a statement.
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"We have not been immune from industrywide pressures including an economic slowdown in key markets and higher grape prices," he said.
"Put simply, financial returns from wine have not met our expectations," he added.
Outside wine, Fosters reported a 0.4 percent drop in net profit to A$713.2 million (US$615.7 million).
Fosters said its beer business in Australia "remains robust and continues to generate solid earnings growth," the company said.
Foreign exchange movements in the 12 months to June 30 cut wine earnings by approximately A$70 million (US$60 million).
The review of Fosters' wine strategy was expected to be completed by the end of the current calendar year, the company said.
Johnston was a non-executive director who was appointed acting chief executive officer in July until a permanent replacement can be found for the outgoing boss, Trevor O'Hoy.
O'Hoy, who was appointed chief executive officer in 2004, resigned in June. Fosters then announced it would review its underperforming wine assets.