Getting back in the black is a massive challenge for Southcorp but it is 'eminently achievable' – and the company will come through intact, bullish executives said today.
While takeover stories appear almost every 24 hours in the Australian press, Southcorp global marketing director Chris Hancock and Europe chief Jeffrey Wilkinson told decanter.com – ‘We’re fine’.
Speaking at the London International Wine and Spirits Fair Hancock said, ‘With our strength of brands and our resources, a return to profitability is eminently achievable.’
Southcorp shares are at a seven-year low and the company has posted three profit warnings. Wilkinson pinned the blame for the company’s financial woes squarely on ‘overzealous’ and unbalanced discounting which affected such brands as Lindemans, Rosemount, and Penfolds. He said stopping deep discounting was the only sure way to return to profitability.
The company – makers of Grange, Lindemans, Rosemount, Devil’s Lair and a host of big names – is also spending US$2m on market research which will steer a sustained media campaign.
Wilkinson knocked back the constant takeover speculation, and rumours that parts of the business were for sale. In the last weeks both Fosters and Lion Nathan have denied being interested in Southcorp. Shares rose slightly on Tuesday amid more rumours of a Fosters takeover bid.
Today the West Australian newspaper suggests Lion Nathan shares are rising as investors consider the possibility it will cherry-pick Southcorp brands discarded by Fosters after a takeover.
‘None of the brands is in any danger of being sold,’ he said, adding that as the Oatley family of Rosemount, and two others, owned 40% of the shares, Southcorp was not an ‘exciting’ takeover proposition.
Wilkinson insisted Southcorp was suffering from ‘tall poppy’ syndrome – the company was so successful it was an easy target – and rumours of its demise were exaggerated.
‘Grange 1998 was released at the beginning of the month at $450 a bottle. It sold out in an hour and a half. Do you think that’s the sign of a company on its nose?’
Chief executive John Ballard will announce full-year results in September.
Written by Adam Lechmere22 May 2003
