ASX - Appendix 4D - Half Year Report

FOSTER'S FIRST HALF EARNINGS PER SHARE UP 9.7%

·               Net profit¹ up 6.0% to $393.5 million

·               Net sales revenue down 0.5% (constant currency up 3.2%) to $2.36 billion

·               EBITS margin up 1.0 percentage point (constant currency up 1.4 percentage points) to 26.9%

·               Cash flow after dividends increased to $288 million

·               Interim dividend up 11.6% to 12.0 cents per share

Foster's Group Limited (Foster's) today reported a 6.0% increase in first half net profit¹ to $393.5 million, with earnings per share¹ up 9.7% to 20.1 cents. 

On a constant currency basis, net sales revenue increased 3.2%, earnings before interest tax and SGARA (EBITS) increased 9.1% and earnings per share increased 15.4%.

"A shift toward premium products, improved pricing outcomes and the realisation of efficiency benefits contributed to solid first half growth in earnings", said Chief Executive Officer, Trevor O'Hoy.

"Performance in Australia, Asia, Pacific and Europe was strong, with improved product mix, revenue growth and cost performance. However our North American earnings were impacted by exchange rates, a slower US wine market in November and early December, a decline in merchandising effectiveness and a planned change in mix", Trevor said.

EBITS in the Australia, Asia and Pacific (AAP) region grew 14.1% (13.2% constant currency) to $515.5 million with good growth in beer and premium wine.  In Australia Foster's growth in premium import and mid-strength beer was ahead of category rates (Source: AC Nielsen).

AAP Beer Cider and Spirits/RTDs (BCS) EBITS increased 9.4% to $433.4 million and included a $17.8 million profit on the sale of properties adjacent to the Abbotsford brewery and $4.9 million in Australian logistics transformation costs.  AAP wine EBITS increased 47.9% (48.2% constant currency) to $82.1 million driven by significant mix enhancement, improved efficiencies and prior period packaging cost overruns no longer reported in the AAP region.

EBITS in the Americas decreased 32.2% (11.9% constant currency) to $98.3 million, impacted by softer sales for Australian wine, increased cost of goods and unfavourable sales mix as distributors stocked Beringer White Zinfandel and California Collection wines prior to the planned 1 January 2008 price rise.

A slow down in wine category growth in November and early December, and a reduced share of major retail chain merchandising activity resulted in an increase in Foster's US distributor inventories compared to the prior period.

EBITS in Europe, Middle East and Africa (EMEA) grew 16.5% (22.9% constant currency), benefiting from strong growth in the Nordics, selective price increases and cost savings from the move to in-market packaging of some products.