Wine benefits flow in Foster's result

For the year to the end of June Foster's has announced a tax-paid profit of A$465.2 million. Operating revenue climbed 30% to A$4.5 billion and earnings before interest and tax rose 28.5% to $836 million.

Contributions from the company's wine business now represents almost 41% of the group's earning before interest and tax compared with around 24% last year.

Foster's boss, Ted Kunkel, says the latest result is an excellent one and concludes a landmark year for the company.

"Our A$2.9 billion acquisition of Beringer Wine Estates transformed the group into a global beverage powerhouse with annual revenue of more than A$4 billion.

"Our Australian beer business, despite turbulent trading conditions, reported a solid profit increase and continued to generate the strong cashflows that underpin the group's growth. The international beer business increased its profit by almost four times and Foster's growth engine, Beringer Blass Wine Estates, lived up to expectations delivering strong growth, particularly in export markets.

Mr Kunkel says Beringer Blass Wine Estates is now the third most profitable wine company in the world.

"Today's result is an outstanding example of performance under pressure, with growth in all our core businesses despite fluctuating economic conditions.

"In addition, earnings per share growth was delivered in spite of the Beringer acquisition, which we had originally anticipated would be EPS dilutive."

One of the few negatives for the company was a writedown of A$39.5 million against internet wine distribution business, Wine Planet. It also took a one-off expense of A$27.5 million relating to its investment in last year's Olympics in Sydney.

"The Olympics represented a unique opportunity not only to support Australia's athletes, but also to raise the profile of the Foster's brand and build sustainable sales worldwide and Foster's is confident the investment will deliver an excellent return for the group in the long term," says Mr Kunkel.

In New Zealand, the company says its operations were successfully restructured to form an integrated beverage business encompassing beer, wine and spirits. The format has since been rolled out to all the company's Pacific businesses - two breweries and a distillery in Fiji and a brewery in Samoa.

In April Foster's bought Matua Valley Wines and reports the business sold 135,000 cases of premium varietal wines in fiscal 2000.

"Exports of Matua represent 35% of sales and prior to the acquisition, focused mainly on the markets of Australia and Europe, giving great scope for penetration into the rapidly growing US market for New Zealand wines," the company says.

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