Foster's Group earnings per share* up 14.8%
Operating cash flow pre interest & tax up 43.2%
*1 Net Profit After Tax and Earnings Per Share are continuing businesses pre significant items, SGARA and amortisation
CEO Comments
Foster's Chief Executive Officer, Trevor O'Hoy said:
"One year on from the completion of the Southcorp acquisition, Foster's is a fundamentally different company.
"We are successfully integrating Southcorp, realising synergies and re-engineering global supply to be more flexible, responsive and low cost.
"I'm happy to report that the Southcorp integration is now largely complete and synergy capture is ahead of plan.
"We've integrated sales and related support functions, rationalised production infrastructure and overheads, and developed a strong pipeline of initiatives to grow wine revenues.
"During a period of integration and transformation, the strength of our core businesses and the benefits of our balanced portfolio shone through.
"For the second consecutive year, normalised earnings per share grew more than 14%, and we expanded EBIT margins in all of our businesses except Wine Clubs and Services. Group margins were up 180 basis points to 22.6%. Pro Forma[1] Group margins expanded 370 basis points.
"Significantly, the Southcorp acquisition was neutral to earnings in its first full year.
"We've continued to narrow our focus on premium drinks, realising significant value from under-performing or non-strategic assets, from breweries in Asia to wineries in the Hunter Valley.
"Today we took that a step further, announcing our intention to dispose of our Wine Clubs and Wine Services businesses; further reinforcing our focus on core businesses.
"Strong operating cash flows and proceeds from asset sales have contributed to reduce net debt to $3.5 billion, creating the opportunity to return funds to shareholders through an on-market share buy-back.
"CUB delivered another outstanding result, driven by strong revenue growth in our core beer, spirit and ready-to-drink portfolios, and the realisation of supply and overhead efficiencies.
"We've reconfigured our Australian customer facing business into a new, customer-focused, service-oriented organisation, creating revenue and margin opportunities for both customers, and Foster's.
"Our global wine business faced challenges during the period and revenue growth was disappointing. While our focus on integration and synergies created some distraction, innovation is now firmly at the top of the agenda.
"Today, we re-launched Rosemount as a contemporary style leader and we introduced the Lindemans Country of Origin range, demonstrating our unique global sourcing capability. These are just two examples of a range of innovation and new product development initiatives that we believe will drive improved revenue performance in 2007.
"Notwithstanding the cyclical impacts of wine oversupply in Australia, Foster's is well positioned with balanced supply commitments and significantly increased flexibility in future years. The wine category continues to show growth in all of our markets. Consumers continue to demand high levels of quality and consistency that premium branded products such as ours are uniquely able to provide.
"As a business, we have never been in a better position to grow, with most of the integration activity now behind us, and a strong pipeline of new product initiatives in place to drive revenue growth.
"Looking forward we remain confident of achieving all of the financial targets we put in place at the time of the Southcorp integration.
"Finally, we've taken another important step towards being One Foster's with the introduction of a new consumer-focused regional organisation structure from 1 August.
ASX - Foster's Group Full Year Results F06 (Full) (PDF, 1.1 Mb)
