Foster's lifts U.S. grape harvest
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CEO Kunkel said in August wine profits were hit by the tough California market.
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SYDNEY, Australia (CNN) -- Australian beer and wine-making giant Foster's Group says its 2003 California grape harvest is up 6 percent over the previous year.
Foster's said Tuesday its total crush intake, including bulk wine, will reach 140,600 tonnes, compared with 132,600 tonnes in 2002.
About 73 percent of the harvest is made up of white grapes and red varietals for blush wine, with the remaining 27 percent for red grapes.
Foster's, best known for its beer operations, runs its wine business through its Beringer Blass Wine Estates (BBWE) group.
It spent $1.6 billion in 2000 to buy the U.S.-based Beringer wines, but has seen reduced earnings in the U.S. market because of intense competition in California and appreciation of the Australian dollar against the greenback.
BBWE managing director Walt Klenz said overall wine grape production in California for 2003 was expected to be down 5 to 10 percent from 2002.
"This reduction, along with the decline in new vineyard plantings in California during the last three years, will contribute to a more balanced supply coming onto the North American market," he said.
Klenz said there were also "encouraging indications" that bulk wine pricing in California had firmed, from a low base.
In August, Foster's posted a 17 percent drop in full year earnings to Aust. $463 milllion ($301 million) after restructuring costs and writedowns.
CEO Ted Kunkel said at the time that the group had maintained its strong margins in beer and wine, but the wine profit was hit by the tough California market and currency movements.
On Monday, Foster's announced it had completed the first phase of its capital management program with a A$668 million share buyback. The buyback covered 167.1 million shares, equal to 8.2 percent of issued capital.
Foster's also said it would buy back another 100 million shares next year, subject to shareholder approval in March.
Shares in Foster's are trading Tuesday at A$4.50, up 0.2 percent from Monday's close.
