Foster’s, Suncorp Metway and Mirvac report profit falls: Economy roundup

It’s been another ugly day in the profit reporting season, and it’s clear where the most carnage is; the consumer, financial and property sectors.

It’s been another ugly day in the profit reporting season, and it’s clear where the most carnage is; the consumer, financial and property sectors.

Beer and wine giant Foster’s Group has reported an 88% fall in net profit to $111.7 million in 2007-08, as the company’s struggling wine business was hit by slowing sales and higher grape prices.

Foster’s is conducting a strategic review of its wine division and may consider selling it when the review is completed at the end of 2008. The company says it expects its beer business should remain resilient despite the looming economic slowdown.

Queensland-based banking and insurance company Suncorp Metway posted a 47.7% fall in net profit in 2007-08 to $556 million as a result of higher insurance claims and the poor performance of global investment markets.

The company expects its dividend will be flat in 2008-09 at 107c per share.

Property development company Mirvac posted a 69% fall in net profit to $171.8 million for 2007-08, blaming the result on falling property values, particularly in the mortgage-stressed residential sector.

But there were some bright spots in the gloom.

Junior telecommunications company M2 Telecommunications posted a stellar 139% increase for 2007-08 to $5.7 million, thanks to two major acquisitions and strong growth from the company’s wholesale division.

Chief executive Vaughn Bowen says the wholesale division, which resells telecommunications and data services to small phone companies, achieved organic growth of 400% last year.

“That’s just shooting the lights out. It’s a big pie, so small and medium sized operators can find themselves in niches that aren’t being serviced well by the big companies. We are struggling to keep pace with our customers.”

While many public companies are cautious about the outlook for 2008-09, M2 is forecasting revenue and profit growth of 40%.

“We have less than half than 1% of the telecommunication sector’s revenue. On that basis our opportunity for growth is big. We’ve barely scratched the surface.”

After rising by 1.7% on Monday, the benchmark S&P/ASX200 fell 1.65% to be a 4931.9 at noon AEST.