Monday, brewer and wine maker Foster's Group Limited (FBRWY.PK) announced a cut in its fiscal 2008 earnings per share growth outlook, a non-cash write down to wine asset carrying values and a strategic review of the global wine business. The company also announced the resignation of chief executive officer.
The Melbourne, Australia-based company said it expects net profit before significant items for fiscal 2008 to be between A$700 million and A$715 million or US$666 million and US$680 million. Earnings per share are expected to be between 36.2 Australian cents and 36.9 Australian cents.
Foster's also announced that it now expects 2008 earnings per share growth to be between 5% and 7%, compared to earlier forecast of about 10% growth.
The company said it expects to report a non-cash impairment charge of A$600 million A$700 million to the carrying value of its global wine assets. Foster's also expects to report a A$70 million non-cash write down of surplus Australian bulk wine inventories.
The company said in the second-half, business performance has been impacted by continuing disappointing results from wine in the Americas and slower revenue growth in Australia largely due to the slowing US economy and the ongoing pressure on the Australian wine category from the continued strength of the Australian dollar.
Foster also announced that the company's Board has accepted the resignation of Chief Executive Officer, Trevor O'Hoy. The company said Trevor O' Hoy led Foster's through a period of significant structural and business change, including the acquisition of Southcorp Limited, the rationalization its manufacturing and logistics footprint and the divestment of non-core assets.
O'Hoy, who was appointed chief executive officer in 2004, has agreed to stay on to facilitate an orderly transition until the appointment of his successor.
Foster's Chairman, David Crawford in a statement said that trading conditions have been tough and the company has been hit hard by a strong Australian dollar.
Crawford noted that Foster's paid too much to acquire wine assets and it did not execute the Southcorp integration as well as it expected. The company acquired Australian winemaker Southcorp in 2005 for A$3.7 billion or US$2.8 billion.
FBRWY.PK ADR declined $0.07 or 1.37% and closed Monday's regular trading session at $5.05.
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