Foster’s wine unit continues to seep money

"We won’t be commenting on media rumour or speculation," CEO Ian Johnston said, after reporting an AUD 464.4 million annual loss, which stemmed from a previously flagged AUD 1.3 billion writedown of the value of the group’s troublesome wine division.

Excluding the one-off impairment charges, Foster’s posted an AUD 698.3 million after-tax profit, 4 percent lower than the previous year, while group sales revenue fell almost 5 percent to AUD 4.3 billion (EUR 3.0 billion).

Foster’s beer division, Carlton & United Breweries, has continued to perform well, despite tough market conditions. Earnings were up 5 percent to AUD 904 million (EUR 639 million).

However, Foster’s wine business has remained in a spot of bother. Earnings across the division, which was recently rebranded Treasury Wine Estates, fell 27 percent to AUD 221.3 million (EUR 156 million), with unfavourable foreign exchange rate movements alone costing AUD 123 million.

The biggest earnings declines in the wine division were seen in Europe and Britain, down 67 percent, and the Americas, down 33 percent.

Foster’s transformation programme, which involved separating the beer and wine operations, is now largely completed. But a formal decision on the demerger needs to be taken by Foster’s board. Should the board wave the green flag, the demerger will go ahead during the first half of next year.

Foster’s did not declare a final dividend. Investors will be asked to vote on a potential 12c-per-share payout at the annual meeting in October.