Foster's chief resigns as wine sales run dry
27 August, 2008
Page 5
Foster's chief executive Trevor O'Hoy has resigned as the Australian drinks group cut profit forecasts amid concern for its ailing wine division.
O'Hoy's resignation was accepted by the Foster's board on June 10, ending his 33 years at the group.
His departure was accompanied by a warning to the market, which saw Foster's slash its 2008 earnings forecast from an increase of 10 per cent to a rise of between 5 and 7 per cent.
A poor performance in wine has also prompted a full-scale review of the firm's global strategy for its wine division.
Surplus bulk wine that could not be sold means Foster's expects a US$70 million write-down for its full year, the group said. Wine sales have been poor in the US, hampered by an economic slowdown and a strong Australian dollar.
Chairman David Crawford admitted the firm had "paid too much" to build its wine business, especially in relation to the takeover of Southcorp in 2005.
" We did not execute the Southcorp integration as well as we expected and operating conditions are now more challenging," Crawford said.
Foster's wine division review will include "a comprehensive analysis of wine markets and segments" as well as considering the structure of the business.
O'Hoy's resignation was accepted by the Foster's board on June 10, ending his 33 years at the group.
His departure was accompanied by a warning to the market, which saw Foster's slash its 2008 earnings forecast from an increase of 10 per cent to a rise of between 5 and 7 per cent.
A poor performance in wine has also prompted a full-scale review of the firm's global strategy for its wine division.
Surplus bulk wine that could not be sold means Foster's expects a US$70 million write-down for its full year, the group said. Wine sales have been poor in the US, hampered by an economic slowdown and a strong Australian dollar.
Chairman David Crawford admitted the firm had "paid too much" to build its wine business, especially in relation to the takeover of Southcorp in 2005.
" We did not execute the Southcorp integration as well as we expected and operating conditions are now more challenging," Crawford said.
Foster's wine division review will include "a comprehensive analysis of wine markets and segments" as well as considering the structure of the business.
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