Foster’s Group CEO Trevor O’Hoy is leaving after a 33-year career with the company.
Foster’s announced the resignation today and also announced a AUS$600-700m write-down of its wine assets in the US and Australia, including a AUS$70m write-down of surplus bulk wine.
It is currently reviewing all its wine strategies and operations.
Foster’s chairman David Crawford is personally supervising the review. He said today, when announcing O’Hoy’s resignation, that he would not pre-empt decisions with ‘all possibilities’ being considered.
A split of the beer and wine assets has been mooted in the financial sections of the Australian press.
Recently a former managing director of Foster’s wine division, Terry Davis, now heading Coca Cola Amatil, acknowledged that CCA and SAB Miller could consider a joint bid for Foster’s brewing assets.
Davis, who is believed to have no interest in the company’s wine assets, has been mentioned as a possible successor to O’Hoy, who was largely responsible for the trouble-prone AUS$3.2bn takeover in 2003 of Southcorp.
‘The reality is we did not execute the Southcorp integration as well as we expected and operating conditions are now more challenging,’ Crawford said yesterday.
‘We must also recognise and acknowledge that we paid too much to acquire wine assets.’
Industry sources also mention the current head of Foster’s wine division, Jamie O’Dell, as a possible successor to O’Hoy, together with former Scottish and Newcastle CEO Tony Froggatt and former Allied Domecq CEO Philip Bowman.
Foster’s would not comment on any recruitment plans except to say, ‘We have begun the process of recruiting: it will be an international search. No names have been mentioned.’
Crawford said that Foster’s currently expects a pre-tax net profit of between AUS$700m and AUS$715m in 2007-08. In 2006-07 it was AUS$716m.
He said that second half business performance has been hurt by ‘disappointing’ results from wine in the Americas and slower revenue growth in Australia.
The slowing US economy and the continuing strengthening of the Australian dollar were the main causes.
Written by Chris Snow in Adelaide