MELBOURNE: Australian brewer and winemaker Foster's Group Ltd posted a modest 4.1% rise in first-half profit yesterday, and warned that tougher competition in the wine industry meant it would struggle to meet its full-year targets.
A strong result from its Australian beer division underpinned the result, which was a shade above market expectations, but the rate of growth in the burgeoning wine sector slowed, said the owner of Wolf Blass and Beringer wines.
Foster's chief executive Ted Kunkel pointed to discounting in the company's key wine markets and slowing demand due to wider economic conditions, but said growth at its US wine business had outpaced total industry premium wine growth during the half.
“We expect the next six to 12, maybe 18 months to be tough in the industry, but given the brand portfolio ... we feel we are better placed to weather that storm than most,” Kunkel added.
Foster's, Australia's largest brewer, posted a net profit for the half of A$335.3mil, while operating revenues rose 6.4% to A$2.7bil.
Foster's won higher volumes and margins in the half in its Australian beer business, where its brands include Foster's Lager, Victoria bitter and Cascade Premium, as hot weather halted sliding total beer consumption in the mature market.
Its Australian beer unit saw earnings growth of 7.1% from a year earlier to A$260.8mil, while the wine division posted a 3.9% rise in earnings to A$253.7mil. Wine now accounts for about 42% of the group's total earnings.
Foster's had broadened its business in 2000 with the purchase of US wine company Beringer.
In the last financial year, wine revenues surpassed beer revenues for the first time, but beer remains the group's cashflow engine room. - Reuters
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