What will almost certainly the last AGM of Foster’s Group was held in Sydney yesterday and judging by the gloomy outlook, the incoming owners SAB Miller are going to have their work cut out making the multi-billion dollar deal pay off in the short term.
One more meeting will be held later in the year to vote on the huge bid from SAB Miller.
Of course the takeover could be called off if Europe fails to rescue itself, or markets tank sharply because they reckon the eurozone won’t survive.
Markets wobbled in Asia, Europe and the US overnight on fears the meeting will fail or come up with a fudge that will leave Italy, Spain and the region’s banks exposed.
Judging by the way markets have been rising, investors think that’s not going to happen, but then the credulous have believed the previous claims from European leaders that Greece will be saved (at least twice) and that bailouts would not be required for Greece, Ireland and Portugal.
At the moment investors are buying European hot air and silver linings.
But, assuming (and that’s always a trap) that the bid goes ahead, Foster’s management made it clear yesterday that the outlook for the huge, sluggish beer market was not very heady. In fact, ‘flat’ would not be an accurate description.
Foster’s last CEO Pollaers told shareholders at the company’s annual meeting that consumer confidence and interest rate settings would hurt beer sales for the next year.
Mr Pollaers said the beer market had been in decline since last year and had reached a low at the beginning of this year.
"As I mentioned, the economic environment has been one of the toughest we have seen in nearly 20 years," Mr Pollaers said.
Bad weather and an economic downturn contributed to Australian beer sales falling 6% as drinkers turned away from beer.
But he claimed to see some signs of a steadying in beer sales in recent months.
He said a turnaround in the company’s recent performance had come despite economic headwinds and generally poor trading conditions.
Mr Pollaers said Foster’s would next week launch Victoria Pale Lager — a new crisp full-strength beer. The company will also launch a new Crown Lager marketing campaign.
Mr Pollaers said he believed that once Australia moved through the current period of economic uncertainty the beer category would return to its long-term trend of moderate growth.
Earlier, Foster’s chairman David Crawford recommended shareholders accept the $12 billion takeover offer from global brewer SABMiller.
If the takeover is approved by shareholders later this year, today’s AGM will be the company’s last.
Mr Crawford said the offer from SABMiller was full and fair value and the company had suffered from the global financial crisis.
Foster’s shares were down a cent at $5.30.
