Southcorp wine group sacks CEO
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Australia's biggest wine group, Southcorp Ltd, has sacked its chief executive Keith Lambert after shocking investors two weeks ago with an earnings warning.
Southcorp told the Australian Stock Exchange on Monday that it had asked for and received Lambert's resignation, "effective immediately".
Southcorp's chairman Brian Finn will act as chief executive until a successor is appointed.
The wine group, whose lineup includes such premium Australian brands as Penfolds, Rosemount and Lindemans, stunned the market on January 21 when it cut its earnings guidance for the year to next June by 14 percent.
It said it now expects earnings before interest, tax and amortization of Aust. $287.1 million ($168 million), down from an October estimate of A335 million.
Ratings on watch
After Southcorp's January 21 earnings warning, ratings agency Standard & Poors immediately put the company's BBB+ long-term rating on credit watch with negative implications.
Southcorp and other producers have been engaged in promotional discounting in recent months under pressure from big retailers such as Coles Myer and Woolworths, who both have extensive liquor chains.
Lambert had come in for criticism over Southcorp's willingness to discount its premium brands.
Lambert was running the privately held premium winemaker Rosemount Estates when it was acquired by Southcorp in 2001 in A$1.4 billion merger. He moved into the CEO role at Southcorp as a consequence of that deal.
Finn said Lambert had led the company successfully through the integration with Rosemount, transforming Southcorp from a diversified industrial business into a "leading international premium wine company".
Different skills needed
But he said the board now believed that "different leadership attributes and business experiences" were required to take the company forward.
Finn said Southcorp also needed to cut costs, improve its product mix and have more effective promotional spending.
Shares in Southcorp closed 1.14 percent higher at A$4.43 Monday on a day the broader market dipped about half a percent.
But Southcorp is already off 3.7 percent for the year and is well below its record high of A$8.38 seen in August 2001.
The market has also been buzzing with talk of a potential takeover of Southcorp, after smaller rival BRL Hardy agreed last month to a A$1.9 billion friendly merger with its U.S. partner, Constellation Brands.