Foster's Group Limited today announced results for the full year ended 30 June 2003.
Improved returns and strong operating cashflows
• Reported net profit after tax (NPAT) of $462.9 million and earnings per share (EPS) of 22.3 cents
includes a one-time charge of $105.2 million (after tax) primarily due to the outcomes of the Carlton and United Breweries (CUB) operational review.
• Normalised NPAT (adjusting for the contribution from Self-Generating and Re-Generating Assets(SGARA), significant items and amortisation), of $626.7 million, 9.1% higher than the previous comparative period.
• Normalised EPS increased 7.8% to 30.4 cents.
• Operating cashflow (after interest and tax) of $696.5 million, up 9.8%. Normalised operating cashflow was up 18.4% to $597.1 million.
• Continued improvement in return on capital employed (ROCE), increasing from 13.0% to 13.8%, and remaining at a healthy margin above Foster's weighted average cost of capital.
• Strong margins in beer and wine trade maintained.
• Another impressive performance from the CUB Group with a 6.5% increase in earnings before interest, tax, amortisation and significant items (EBITA), continuing substantial cashflows and a 210 basis point ROCE improvement to 26.8%.
• Australian Beer EBITA of $463.1 million, 7.6% higher than the previous comparative period on the back of volume growth of 1.0%.
• International beer business reports impressive 25.5% EBITA growth and improved returns.
• Wine EBITAS (EBITA excluding SGARA) contribution of $428.8 million down 3.1% year on year, due mainly to the strengthening AUD/USD exchange rate and a less profitable second half performance from Trade Americas as a result of an intensely competitive environment.
• At comparable exchange rates, Wine EBITAS increased 4.2%, a creditable result in challenging conditions.
• Wine operating cashflow increased 13.9% to $306.4 million reflecting management focus on improving the cash profile of the division.
• Trade Asia Pacific, Trade Europe and Wine Services achieved EBITAS growth of 16.1%, 39.4% and 14.7% respectively.
• Wine Clubs EBITAS was down 10.4% with mixed performances across the global businesses.
Movements in key financial ratios show the improving financial strength of the company during the period.
Gearing, on a net debt to equity basis, reduced from 73.8% to 58.9%. Interest cover, on an EBITAS to net interest expense basis, increased to 6.8 times.
With regards to conversion of profit to cash, group operating cashflow (pre interest and cash) exceeded 90% of EBITDAS (EBITA excluding depreciation and SGARA).
The Directors have declared a final dividend of 10.5 cents per share fully franked, an increase of 10.5% over the previous year, bringing the full year dividend to 18.75 cents per share, an increase of 10.3%.
This dividend will be fully franked at the Australian company tax rate of 30%.
Foster's believes markets will remain challenging in fiscal 2004 and consequently expects normalised EPS growth will be similar to the year just completed.
President and CEO, Mr Ted Kunkel, said, "Foster's business balance and premium brands have once again delivered solid underlying earnings growth, strong cashflows and improved returns on capital employed." "Particularly pleasing is the group's performance in the second half, where 8.3% growth in normalised EPS was achieved."
"Foster's impressive beer business combined with the premium nature of its wine business, has enabled the group to grow year on year despite the most competitive wine market conditions seen over recent times."
"The financial strength of Foster's, reflected in its strong cashflow generation, combined with the intention to spin-off the ALH business, positions us to consider capital management initiatives. In light of current market conditions, the group is likely to favour debt reductions and capital returns with management emphasis on maximising value from existing businesses."
Profit Report and Appendix 4E (PDF, 2.9 Mb)
