Today it’s the turn of the under siege Foster’s Group to report its maiden full year profit as a beer group.
Yesterday it was the first result from its former wine arm, the now renamed Treasury Wine Estates Ltd which revealed $64.1 million full year profit and a 6c a share payout to shareholders.
Foster’s profit today will be of interest, but of greater importance will be how it backs up its rejection of the $4.90 a share (minus the final dividend) hostile offer from SAB Miller.
The most tipped suggestion is a solid dividend and a share buyback, with the latter of a size sufficient to use up a large tax refund, plus access the company’s solid cashflows.
Media reports suggest a buyback could be around $500 million.
The buyback is thought necessary to convince shareholders to remain loyal to the board.
But it could also have the added impact of forcing SAB Miller to withdrew the offer and rework it to take account for the smaller number of shares after a buyback, meaning a higher per share price.
A solid dividend could also hurt the SAB Miller offer by reducing the $4.90 price by a significant amount, making it cheaper and more easily defeated.
A rejection or defeat of SAB Miller could see speculative interest renewed in Treasury Wine Estates.
It has already rejected one approach from private equity this year and other interest has been rumoured.
With nothing to compare with, except the $900 million loss from 2010, which included non-wine related activities and borrowings retained by Foster’s as part of the decision to break up the group, it’s hard to get a fix on just how profitable the business is.
Revenue increased 2% to $1.474 billion.
Treasury Wine Estates CEO David Dearie said in yesterday’s statement that it was a solid result.
But like Amcor and so many other companies with an international network, Treasury’s earnings were hit by currency moves and an uncertain consumer environment in many of its key markets.
EBITS (earnings before interest, tax and SGARA – self generating and regenerating assets – and significant items) fell 3.7% to $195.2 million.
"The ongoing strength of the Australian dollar cut reported earnings by around $30 million," director said in the statement yesterday.
"However, underlying earnings momentum continued, with constant currency EBITS growth for a third consecutive half, and up 13.1 per cent for the year," Mr Dearie said.
Strong growth had come from Asian markets, with EBITS up 18.6%.
"We are seeing increasing demand for many brands in our portfolio throughout Asia and consider Asia a critical region and will continue to increase investment to fuel growth," he said.
In America, a softer second half was reported, with EBITS up 8.2% on a constant currency basis, but they were down 14.5% on a reported basis.
In Australia and New Zealand, improvements in business methods had resulted in pro forma EBITS of 14.5%, the company said.
“Some of the standout performers were Penfolds, with value up 20%, Beringer Luxury, with value up 15%, Pepperjack with value up 41%, and Wynns with value up 10%," the company said in yesterday’s statement.
The 6c a share is 50% unfranked.
The company had no debt at June 30.
