Australian drinks giant Foster's Group has reported a 4% rise in annual net profit, but declining wine earnings took some of the fizz out of a strong domestic beer market.
The country's biggest brewer and the world's second-largest wine company said net profit for the 12 months to June was A$741.5m.
Net profit after one-off items increased by almost 300% to A$438.3m, as writedowns linked to the restructure of its troubled wine business fell.
The company said the domestic market remained 'very robust', with earnings from beer, cider and spirits up 2.9% in Australia, Asia and the Pacific. It said that figure rose to 9.6% when currency fluctuations were stripped out of the equation.
But global wine earnings dropped 7.3% and chief executive Ian Johnston said the market would remain challenging in 2010 because of the worldwide slump. 'The wine category is bearing the full brunt of a lack of consumer confidence brought on by global economic conditions,' he said.
Foster's announced earlier this year that it would not sell off its wine assets, which have long affected the company's bottom line, preferring to restructure them in the hope of turning around the ailing business. As part of the restructuring, Foster's will sell 36 'non-core' vineyards and three wineries in Australia and California.
The firm spent billions of dollars expanding its wine business with acquisitions of firms such as Australia's Southcorp and Beringer in the US earlier this decade.
