Update Foster's Group, Australia's largest brewer, has posted a 4.1 per cent decline in full-year profit, hurt by softening demand for beer, a dip in market share and the strong Australian dollar.
Foster's said net profit before one-off items fell to $711.3 million from $742 million a year earlier. That beat estimates of $680 million. It excluded a writedown for wine of $1.27 billion, previously announced.
Shares in the company fell 4.3 per cent, or 27 cents, to $6.07, after surging more than 7 per cent yesterday on takeover talk.
"The real question is the timing of any deal," said Arnhem Investment Management partner Theo Maas.
"Anyone who is looking to buy the beer business wants to make a clear break with the wine business, but if we do have two or three serious bidders, I doubt they would wait until the complete demerger has gone through," he said.
Foster's beer operation, which is to be separated from the ailing wine business in 2011, is widely seen as a takeover target.
Brewing groups SABMiller and Asahi Breweries are among companies said to be looking at Foster's beer operations, valued at more than $12 billion, but have not yet made any formal offers.
Foster's said today that the separation of its beer and wine divisions was on track for the first half of 2011.
Takeover talk has boosted Foster's shares about 12 per cent per cent this year. The broader Australian market is down about 9 per cent this year.
For the second half, Foster's posted a 7.8 per cent rise in profit to $355.6 million, after one-off items, according to Reuters calculations.
Foster's said it remains on track to possible demerger of its beer and wine businesses in the first half of calendar 2011.
Operating revenue was down 4.8 per cent at $4.461 billion.
Foster’s declared no final dividend for 2009/10.
But Foster’s said it remained confident in the fundamentals of the Australian beer market, after its beer business, Carlton United Breweries, delivered a solid result in a more subdied national beer market in the second half of the year.
On schedule
Foster’s chief executive officer Ian Johnston said evaluation of issues, costs and benefits of a potential demerger were on schedule.
‘‘Management, logistics and capital structure deliberations are progressing well with the process of seeking the necessary tax rulings to commence shortly,’’ he said in a statement.
‘‘While no final decision has been made, the timeline for a potential demerger remains the first half of calendar 2011.’’
Foster’s said the operational separation of its wine and beer operations in Australia was now substantially complete.
‘‘Cost reductions of $83 million have been included in the 2010 results with full realisation of the $100 million of benefits expected in the 2011 financial year,’’ Mr Johnston said.
Foster's said that despite a softer consumer environment in the second half, the company was confident that the long-term fundamentals of the Australian beer category remained robust.
Wine outlook mixed
CUB's programs to improve sales and marketing, portfolio realignment initiatives, and increasing production efficiency would drive future performance.
''Market conditions in the wine category remain mixed with oversupply in the Australian market, a subdued consumer environment in key international markets, and the strength of the Australian dollar expected to have an ongoing impact,'' Foster's said.
''However, enhanced route to market capability in all regions, portfolio premiumisation, and the benefit of efficiency initiatives will continue to drive business performance improvement.''
Foster's said that in 2010, its wine business, now called Treasury Wine Estates, had generated stronger earnings in the second half on the back of improving sales focus and benefits from efficiency programs.
On a constant currency basis, earnings rose 20.5 per cent to $221.3 million.
But unfavourable exchange rate movements reduced earnings by $123 million.
''An increasing focus on premium wines, route-to-market changes in all regions, product innovation and brand investment were highlights for the wine business,'' Foster's said.
''Against this, the continuation of subdued consumer sentiment in key international markets and ongoing structural oversupply in Australian wine continue to impact business performance.''
Foster's said Carlton & United Breweries delivered a solid result in a more subdued beer market in the second half.
CUB earnings lifted five per cent to $904.1 million and included $34 million of benefits from efficiency programs.``
In Australia, CUB's off-premise value share in beer remained stable, with net sales revenue per case increasing just over 5.4 per cent,'' Foster's said.
Reuters, with AAP