Australia's Foster's says strong currency to hit earnings
Foster's, the largest brewing and wine group in Australia, said Wednesday the country's strong currency was likely to hurt earnings.
By Agencies |
SYDNEY: Foster's, the largest brewing and wine group in Australia, said Wednesday the country's strong currency was likely to hurt earnings.
The firm said a one US cent rise in the exchange rate wiped about 4.5 million Australian dollars (4.2 million US) from pretax profit.
The Australian dollar has been trading above 92 US cents, its highest level since it was floated in 1984. Some analysts expect the Australian currency to reach 96 US cents by mid-2008.
Each one pence increase in the sterling rate reduced earnings by 8.5 million dollars, the brewer added.
Trevor O'Hoy, the chief executive of Foster's Group, said at the firm's annual meeting that overall "currency is likely to (have) a significant net negative impact on our 2008 earnings growth and return on investment in wine." An ongoing drought in Australia has hurt vineyards reliant on the Murray River, a major waterway, and could lead to a smaller vintage in 2008.
But Foster's expects the smaller 2007 and 2008 vintages to eliminate a massive wine glut that has kept a lid on grape and wine prices in recent years.
Foster's, the world's second-largest wine company with brands including Beringer, Lindemans, Penfolds and Wolf Blass, reported a 17.1 percent fall in net profit for the year ended June 2007 to 966.2 million dollars.
However, the company said that net profit rose 17 percent to 716 million dollars when exceptional items were stripped out, with revenues up 4.7 percent to 4.6 billion dollars.
Foster's expects to make more money on each case of wine sold in Australia partly due to tighter supply and foresees strong beer sales.
The firm said a one US cent rise in the exchange rate wiped about 4.5 million Australian dollars (4.2 million US) from pretax profit.
The Australian dollar has been trading above 92 US cents, its highest level since it was floated in 1984. Some analysts expect the Australian currency to reach 96 US cents by mid-2008.
Each one pence increase in the sterling rate reduced earnings by 8.5 million dollars, the brewer added.
Trevor O'Hoy, the chief executive of Foster's Group, said at the firm's annual meeting that overall "currency is likely to (have) a significant net negative impact on our 2008 earnings growth and return on investment in wine." An ongoing drought in Australia has hurt vineyards reliant on the Murray River, a major waterway, and could lead to a smaller vintage in 2008.
But Foster's expects the smaller 2007 and 2008 vintages to eliminate a massive wine glut that has kept a lid on grape and wine prices in recent years.
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Foster's, the world's second-largest wine company with brands including Beringer, Lindemans, Penfolds and Wolf Blass, reported a 17.1 percent fall in net profit for the year ended June 2007 to 966.2 million dollars.
However, the company said that net profit rose 17 percent to 716 million dollars when exceptional items were stripped out, with revenues up 4.7 percent to 4.6 billion dollars.
Foster's expects to make more money on each case of wine sold in Australia partly due to tighter supply and foresees strong beer sales.
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