By Andrew Starke
The Foster’s Group has announced a 12 percent fall in first half net profit largely as a result of declines in the domestic beer market.
The brewer and winemaker estimates the local beer market contracted by 7 percent in the six months to December 31 while posting profits of $312.1 million, down 12.3 per cent on the result in the first half of 2009/10.
Carlton and United Breweries (CUB) division net sales revenue was down 6.8 per cent in the first half.
“CUB outperformed the Australian beer market and extended its leadership position, increasing market share by 50 basis points, in a market where volume fell approximately 7 percent in the first half,” said Foster’s CEO Ian Johnston.
“Continued portfolio investment, improved planning and execution and increased marketing investment contributed to solid trading performance.
“Share gains and improving revenue per case were not enough to offset poor Australian beer market trading conditions and CUB’s first half earnings pre interest and tax fell by 6.8 percent.”
However Foster’s contends that the decline in CUB’s Australian beer volume in the first half was 5.8 percent, a smaller decline than the broader market.
It also predicts that while beer market volumes have continued to fall in 2011, this should moderate during the second half of the 2010/11 financial year.
“The Australian beer market continues to be affected by a subdued consumer environment and the ongoing impacts of unseasonal weather in peak consumption months,” said a Foster’s Group statement.
“However, having regard to the unusually high beer market volume in the December 2009 quarter, the rate of volume decline is expected to moderate through the second half.
"CUB currently expects beer market volume in the half year to June 2011 to be between 3 and 4 percent below the prior year.”