Australian beverage firm Foster's Group forecast modest earnings growth in the current financial year after a poor performance by its wine business again hurt its bottom line in fiscal 2004.
While net profit for the 12 months to June 2004 was up 73 percent year-on-year at 799.3 million dollars (575 million US), the figure was boosted by one-off gains, including the sale of its pubs business ALH.
Stripping out exceptional items, Foster's underlying annual profit rose just 1.5 percent to 549.2 million dollars. In the second half underlying earnings reached just 228.6 million, down 40.24 percent from 320.6 million in the fist first six months.
Chief financial officer Peter Scott admitted Foster's Beringer Blass wine division had faced a difficult year in fiscal 2004 but said while the outlook remained challenging, particularly in North America, he hoped a restructuring exercise would turn the business around, says Channel News Asia.
Most of the damage was done by the group's Beringer Blass Wine Estates (BBWE) business which cost Foster's $1.5 billion four years ago when it was acquired as the growth engine for what was once a pure brewing company.
BBWE's earnings before interest tax and amortisation and significant items (EBITAS) crashed 32 per cent, falling from $428.8 million in 2003 to $291.7 million.
Like its competitors, BBWE has been forced to sacrifice some of its profit margins in the face of the California grape and wine glut, price wars and US consumers quaffing cheaper wines.
Announcing his first full-year profit result since taking the helm in April, Foster's chief executive Trevor O'Hoy said Beringer's figures were "unacceptable".
Some of the pain was set to continue in the first half of this new financial year, but a significant turnaround in the second six months was expected, according to The Age.
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