Fosters to return A$500m to shareholders

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Related tags: Chief executive officer, Foster

Fosters intends to return at least A$500m to its shareholders, as the company tries to fend off the hostile offer SABMiller (SAB) made last week.

The Australian brewer plans to make the return, despite posting an A$89m annual profit drop in its 2011 full year results.

“It is probably one of the few options that they have, so it’s not unexpected that they’re doing that,”​ said Theo Maas, in Reuters. Maas is a portfolio manager at Arnhem Investment Management which does not own Foster’s shares.

“But I’m not sure if in the bigger scheme of things it’ll make any difference.”

On Wednesday, SAB took its $10bn (€6.9 bid) for Foster’s straight to company shareholders after the board rejected its offer in June for being too low.

Last Thursday, Fosters urged shareholders to ignore SAB’s recent offer, advising them to take no action.

“We’re as well placed as anyone, and I would almost go as far as saying better positioned than anyone, to manage the interests of our shareholders,”​ said John Pollaers, chief executive officer of Foster's Group.

Profit drop

Net profit before one-off items fell 8.7 per cent to A$494.9m (€358m) for the year ending 30 June.

After the recent demerger of Foster’s wine business, Treasury Wine Estates in May, this fell to a loss of A$89m (€64.5m).

However, the results are an improvement from last year’s A$464m loss.

"This has been a transformational year for Foster's and I'm pleased to say that the turnaround is on track,"​ said Pollaers.

The split had allowed the company to focus on its beer and cider business, said the CEO.

Foster's said beer volume declined 7.3 per cent in the first half and 4.6 per cent in the second half across the industry, which the firm put down to the subdued consumer.

Floods and cyclones in the eastern states over the summer had also hit demand, said Fosters.

The rate of decline appears be slowing, said Fosters, with volumes down only three per cent in July.

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