FOSTER’S: ABSOLUTELY NO TAKEOVER BIDS
Foster’s Group posted a slight rise in both sales (3.5%) and income (90%) for the first half of its financial year, with global wine volume up 3.3% in the Americas.
Global wine volumes for the company were up by 3.1%, although flagship brand Rosemount dragged the company down 15% in volume and 20% in value, hurting more positive numbers from Wolf Blass and Lindemans.
As you may remember, Foster’s relaunched Rosemount in the U.K. during the first half “with encouraging consumer response,” according to Trevor O’Hoy. The brand will be reintroduced in Australia, the Americas and Europe during the second half.
So while it’s apparent Rosemount has held Foster’s back a bit, Australian and U.S. wine packaging facilities, along with wine export logistics, were behind and increased first half costs as a result. Trevor noted that while first half performance, particularly in wine, was inversely affected by the multi-beverage route to market model, the company has made it a “major priority” to address the problem and eventually transition to a global supply beverage model.
“While not everything is going exactly as planned, the majority of our initiatives and strategy remains intact,” said Trevor. One example is the Southcorp integration, which is now substantially complete 18 months after the acquisition.
Beringer, Lindemans, Penfolds and Wolf Blass are all doing well, according to the company, as global wine premium continues to show attractive top-line growth opportunities. Currently, the premium Australian, Italian, New Zealand and California wines are the key growth drivers for the company, with Lindemans volume up 14.2% on a global scale.
Favorable mix and selective price increases contributed to Foster’s California and imported wine share gains in the $6-8 and $10 and above price points in the Americas, said Pete Scott, CFO. Product innovation contributed about 1% to wine volume growth
Regarding this year’s Australian wine harvest, Foster’s relayed recent industry estimates that production is down 40% from 2006 thanks to adverse climate conditions. For the company, this is good news as Foster’s looks forward to a more balanced wine market in Australia.
“Grape and bulk supply is in good shape as 2007 begins to move the Australian wine industry to a more balanced place,” said Trevor.
Currently, Australian wines make up the majority of Foster’s brands, about three quarters, but Trevor expressed he would eventually “like to see 50% Australian and 50% other wines, but it’s a very long-term goal.”
Moving forward, Trevor said: “Sustained brand investment, improving route-to-market models and operating efficiencies will drive accelerating earnings growth in the second half, and for the full-year.”
Foster's also said today that it has not received any takeover approaches.
"People are well aware of our disclosure requirements and obligations, and I think we have cleared that up two or three times in the last three months,” said Trevor.
"The answer is no." N-O.
With that in mind, Foster’s chief told reporters he was "quietly confident" of meeting analysts' forecasts for annual profit to rise by 19% to $735 million for the full financial year. Only time will tell.
Global wine volumes for the company were up by 3.1%, although flagship brand Rosemount dragged the company down 15% in volume and 20% in value, hurting more positive numbers from Wolf Blass and Lindemans.
As you may remember, Foster’s relaunched Rosemount in the U.K. during the first half “with encouraging consumer response,” according to Trevor O’Hoy. The brand will be reintroduced in Australia, the Americas and Europe during the second half.
So while it’s apparent Rosemount has held Foster’s back a bit, Australian and U.S. wine packaging facilities, along with wine export logistics, were behind and increased first half costs as a result. Trevor noted that while first half performance, particularly in wine, was inversely affected by the multi-beverage route to market model, the company has made it a “major priority” to address the problem and eventually transition to a global supply beverage model.
“While not everything is going exactly as planned, the majority of our initiatives and strategy remains intact,” said Trevor. One example is the Southcorp integration, which is now substantially complete 18 months after the acquisition.
Beringer, Lindemans, Penfolds and Wolf Blass are all doing well, according to the company, as global wine premium continues to show attractive top-line growth opportunities. Currently, the premium Australian, Italian, New Zealand and California wines are the key growth drivers for the company, with Lindemans volume up 14.2% on a global scale.
Favorable mix and selective price increases contributed to Foster’s California and imported wine share gains in the $6-8 and $10 and above price points in the Americas, said Pete Scott, CFO. Product innovation contributed about 1% to wine volume growth
Regarding this year’s Australian wine harvest, Foster’s relayed recent industry estimates that production is down 40% from 2006 thanks to adverse climate conditions. For the company, this is good news as Foster’s looks forward to a more balanced wine market in Australia.
“Grape and bulk supply is in good shape as 2007 begins to move the Australian wine industry to a more balanced place,” said Trevor.
Currently, Australian wines make up the majority of Foster’s brands, about three quarters, but Trevor expressed he would eventually “like to see 50% Australian and 50% other wines, but it’s a very long-term goal.”
Moving forward, Trevor said: “Sustained brand investment, improving route-to-market models and operating efficiencies will drive accelerating earnings growth in the second half, and for the full-year.”
Foster's also said today that it has not received any takeover approaches.
"People are well aware of our disclosure requirements and obligations, and I think we have cleared that up two or three times in the last three months,” said Trevor.
"The answer is no." N-O.
With that in mind, Foster’s chief told reporters he was "quietly confident" of meeting analysts' forecasts for annual profit to rise by 19% to $735 million for the full financial year. Only time will tell.
posted at 1:51 PM
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