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Foster's profits creep up despite slow US wine sales

Published:  23 July, 2008

Net profits at Foster's are up 6% in spite of a slow month for US wine sales last year.

The drinks company's latest half year report shows net profits up to A$393.5 million (186m), which represents the slowest rate of growth for a number of years.

Profits were held back in part by a slowing down of the US wine market in November.

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

"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."

Earnings in the US dropped 32.2% to A$98.3m (46.5m).

The company, which is the second largest wine company worldwide, said US figures were "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 January 1 2008 price rise".