Foster's beer and wine to be separate companies
Foster's Group Ltd. said on Wednesday it will split its global beer and troubled wine businesses into separate listed companies, as the Australian brewer and winemaker warned of a $1.1 billion write-down in the value of the wine operations.business Updated: May 26, 2010 11:08 IST
Foster's Group Ltd. said on Wednesday it will split its global beer and troubled wine businesses into separate listed companies, as the Australian brewer and winemaker warned of a $1.1 billion write-down in the value of the wine operations.
Foster's said in a statement that earnings for the fiscal year ending June 30 were expected between 1.05 billion Australian dollars and AU$1.08 billion ($865 million to $889 million) - in line with market expectations.
But the Melbourne-based company warned that a wine business write-off of between AU$1.1 billion and AU$1.3 billion ($906 million to $1.3 billion) because of price discounting and revised exchange rate forecasts would effect the timing and payment of dividends. Foster's said the separation of beer and wine operations would create separate Australian stock exchange listings for the two businesses.
The separation is subject to a "detailed evaluation of the issues, costs and benefits to Foster's shareholders and ongoing assessment of prevailing economic and capital market conditions," the company said.
Foster's chief executive Ian Johnston said the company was "increasingly seeing the benefits" of separating the two businesses.
Foster's wine business was showing signs of growth, he said, but continued to be affected by years of oversupply in Australia, subdued consumer demand in key international markets and a strong Australian dollar.
The wine business grew to about half Foster's assets in 2005 when the company bought Australia's biggest winemaker, Southcorp, for AU$3.7 billion.
Foster's wrote down the value of its global wine assets in 2008 and announced a strategic review of the wine operations, explaining that Southcorp had not been integrated as well as expected.
First Published: May 26, 2010 11:06 IST