Wine losses hit Foster's bottom line

MELBOURNE: Earnings by Australia's Foster's beat expectations Tuesday, but the drinks giant recorded a net 464 million dollar (413 million US) loss after write-downs in its wine business.

The result, which follows a net profit of 438.3 million dollars a year ago, comes after the group faced impairment charges on its wine assets of 1.3 billion dollars.

Excluding these losses, Foster's posted a net profit of 698.3 million — higher than the underlying earnings of 673.6 million dollars predicted by analysts, Dow Jones Newswires said.

Foster's, which did not declare a final dividend, said net sales revenue was also lower, at 4.29 billion dollars compared to 4.49 billion dollars a year ago.

Foster's chief executive Ian Johnston said the group's performance was improving and it was on track to demerge its wine division from its beer assets in the first half of 2011.

"While no final decision has been made, the timeline for a potential demerger remains the first half of calendar 2011," he said.

The group has been subject to takeover speculation, with interest in the more profitable beer division, while the wine business suffers from oversupply in the Australian market and a soaring Australian dollar.