By Andrew Starke
Foster’s management hopes to play a ‘long game’ in turning the embattled brewer around and will sacrifice short-term margins and market share to achieve this.
While Foster’s Group CEO, John Pollaers, told analysts that the group’s 2011 financial year numbers were a ‘solid set of results’ in a tough market, the company reported its biggest decline in beer sales for 20 years.
Foster’s reported a fall of 8.7 percent in net profit with its brewing arm, Carlton United Brewers (CUB), recording a 6.2 percent slump in beer sales.
However, while the national beer market contracted by 6 percent over the 12 months to the end of June, CUB only declined by 5.6 percent thanks mainly to its cider business.
An upbeat Pollaers said he would need time to turn the business around but, following the demerger of Foster’s beer and wine operation, was confident that the company could now dedicate all of its considerable financial resources and industry expertise to growing the beer and cider business.
”The past year has seen a challenging consumer environment, and as a result a challenging beer category,” he said.
”I remain very confident that once Australia moves through this period of economic uncertainty, the beer category will return to its long term trend of modest positive growth, and as the market leader your company is very well positioned to benefit as this occurs.”
Commenting on the bid by Anglo-African brewer SABMiller to acquire Foster’s, Pollaers said, at one level, it recognised what an attractive company Foster’s remains.
”The Foster’s Board carefully considered the proposed offer and believes an offer price of $4.90 significantly undervalues your company,” he said.
”The Board intends to unanimously recommend shareholders reject the offer once it is formally made.”
Pollaers confirmed that the company had shed about 145 jobs with head office and supply roles most affected.
Other roles within Foster’s are presently being reviewed.
Foster’s will return at least $500 million to shareholders following a tax windfall earlier this year.