Foster's Brewing Group today announced a 9.8% increase in net profit to $267.1 million and a 25.6% rise in earnings before interest and tax, to $471.8 million for the six months to 31 December, 2000.

Excellent growth was recorded by the wine operations further reinforcing the strategic merit of Foster's move to become a major player in global wine. Australian beer performed very well in the face of unsettled trading conditions and international beer was up strongly.

"The result for the half clearly demonstrates that Foster's strategy of developing a well balanced global premium branded beverage company, with the right mix of cash flow and growth businesses, is continuing to deliver shareholder value," President and CEO, Ted Kunkel, said.

Overall sales revenue was up 21.6% to $2 billion for the period reflecting the Beringer acquisition and improved margins across the core beer and wine portfolios.

Earnings per share (EPS) (pre abnormals) rose 13.5% to 16 cents and EPS (post abnormals) was up 3.5% to 14.6 cents, a very positive initial indicator given the acquisition of Beringer was expected to be EPS dilutive in the first year.

Cash EPS (pre abnormals) increased a solid 16.4% to 17 cents and cash EPS (post abnormals) was up 6.8% to 15.6 cents.

"Cash profit for the group increased 13.5% to $285.8 million demonstrating the group's continuing strong cash generation capacity," Mr Kunkel said.

The period was highlighted by the acquisition of Beringer Wine Estates in the United States, positioning Foster's wine division as one of the world's leading premium wine producers. To fund the acquisition, the group raised $700 million from the issue of 175 million shares at the end of August, by way of a 24 hour bookbuild, and $748.5 million (US$400 million) from a convertible bonds issue at the same time. The combined capital raising of $1.4 billion represented one of the largest single placements in a 24-hour period in Australian corporate history and further reflects the strength and appeal of Foster's in global capital markets.

"Beringer has redefined Foster's capital base and provided a powerful new growth engine for the group, with over 60% of the group's funds employed now invested in wine,"Mr Kunkel said.

Beringer, which contributed for three months of the period, earned $63.7 million before interest and tax, while earnings from the existing Mildara Blass business increased a further 17.1% to $103.9 million. Overall, wine sales totalled $677.4 million for the half.

Australian beer earnings rose 5.1% to $231.1 million an excellent result given the unsettled trading conditions in the Australian domestic market following the introduction of the Good and Services Tax (GST).

The half year was the first financial reporting period since the introduction of the GST in Australia which impacted via increases in beer and wine prices. In particular, draught beer prices rose by up to 10% or 22 cents per 285ml glass of beer for the period, impacting on volumes which fell by approximately 4%.

Commenting on the impact of the new tax system on the beer industry, Mr Kunkel said, "The fall in draught beer volumes sold across Australia is directly attributable to the increased beer excise tax at the same time as the introduction of the GST. This excise increase has had an enormous impact on the beer industry, particularly regional pubs. However, I expect that with the support of Democrats and Labor Party in the Senate, the additional excise amount will be removed later this year."

International beer EBIT more than doubled to $8.9 million following the completion of the integration of Foster's four non-Australian beer businesses to form a single division - Foster's Brewing International.

"Foster's began the financial year as a significantly re-defined company. Today it is a uniquely balanced, multi product premium beverage company operating on the global stage. The performance for the first half highlights the underlying strength of the beer business and the growth prospects of wine, which when combined form a powerful source of shareholder value creation," Mr Kunkel said.

The directors have declared a fully franked interim dividend of 7.0 cents per share, 7.7% above the previous corresponding period.

Further information:

Media

Lisa Keenan
Tel: +613 9633 2233
Email: lisa.keenan@fostersgroup.com

Investor Relations

Domenic Panaccio
V-P Capital Markets
Tel: +613 9633 2641