By Andrew Strake
The Foster’s Group has brushed aside market speculation that major global brewers are set to bid for its beer division but its 2009 / 2010 results did little to inspire confidence.
Group CEO Ian Johnston refused to discuss whether Foster’s had been approached by a potential suitor, preferring to focus on contracting beer sales, a write-down of wine assets and next year's demerger of the two businesses.
“Today’s financial results describe a business in which the fundamentals are firmly heading in the right direction, but one that continues to be impacted by subdued consumer confidence in some key markets, and by Australian and New Zealand wine oversupply and by unfavourable currency movements,” was his summation.
Foster’s recorded a 4.1 percent drop in net profit over the period to $711.3 million, excluding the impact of a $1.3 billion write-down of its wine business.
Beer division CUB revealed a 2.1 percent drop in beer sales by volume over the 2010 financial year.
However earnings for the beer business increased 5 percent to just over $900 million for the year and included a $34 million benefit from cost reductions.
CUB’s off-premise market share in beer remained stable at between 50 and 51 percent throughout the year while net sales revenue per case increased just over 5 percent.
Cider continued to grow strongly with volume up 10.1 percent and net sales revenue up 15.3 percent.
Spirits and RTD net sales revenue declined 16.7 percent.
“In the meantime, our focus is on ensuring the businesses are 100 percent committed to driving performance,” said Johnston.
“That’s even more important as we are coming off a soft consumer environment in international wine, and a slowdown in the Australian beer market in the second half of the 2010 financial year. But we are confident that the long term fundamentals of the Australian beer category remain robust,” he said.