Foster's H1 profit up 6 percent, but U.S. drags

MELBOURNE (Reuters) - Foster's Group Ltd (FGL.AX: Quote, Profile, Research), Australia's biggest alcoholic drinks company, posted its slowest growth in first-half net profit in several years on Tuesday, as U.S. wine demand slowed and the strong dollar crimped earnings.

Foster's, the world's second-largest wine company, said net profit before one-offs for the six months to December 31 rose 6 percent to A$393.5 million ($361 million) from A$371.4 million, helped by a strong performance in Australia and Europe.

That beat market forecasts of A$384.5 million before one-offs, according to a Reuters survey of eight analysts, but was well below the double-digit pace of recent years and the 22 percent rise in the six months to June 2007.

Net profit after tax and including items fell 28 percent to A$398.6 million.

Foster's said Australian beer, wine and spirits earnings before interest and tax increased 9.4 percent to A$433.4 million, including a one-off gain of A$17.8 million on the sale of properties.

Earnings before interest and tax in the United States slumped by 32.2 percent to A$98.3 million, hurt by softer sales for Australian wine, increased input costs and a high Australian dollar that reduced earnings translated into local currency. In constant currency terms, earnings fell 11.9 percent.

Foster's U.S. wine business, which is ranked only behind Constellation Brands Inc (STZ.N: Quote, Profile, Research), is facing a slowdown in consumer spending and it said wine sales slowed sharply in November and December.

"December quarter retail sales of Foster's wines were significantly lower than expected," the company said in a statement.

In Australia, Foster's mainstream beers have come under pressure as consumers switch to higher-margin premium beers.