Elders Posts 5% Decline in Annual Profit

The giant Australian conglomerate Elders IXL reported a 5% fall in annual profit despite an increased thirst for its Foster’s Lager.

Grain trading mistakes and bad debts in its finance division eroded profits. “We made a series of wrong judgments, but we’re not likely to do that again,” Elders Agribusiness managing director Michael Nugent said.

“It was a satisfactory result from a very frustrating year,” Chairman John Elliott said after the company announced a $503-million profit.

He blamed the British government’s decision to block his takeover of Scottish and Newcastle Breweries for Elders not beating last year’s bumper $527.35-million profit.

Elders’ sales of $13.6 billion were 15% higher than the previous year and made the company Australia’s largest in revenue terms.

British anti-monopolies agencies in March stopped Elders’ $2.5-billion bid for the Edinburgh brewer, trapping Elliott with a 23.6% stake. The interest bill on that holding cut $41.7 million from Elders’ profit and Elliott said it had also frustrated his plans to use Scottish and Newcastle as a springboard to Europe.

“We had a very clear European strategy of centering the brewing business in Britain, but we have been prevented from doing that,” Elliott said, adding that Elders was looking elsewhere in Europe.

Despite the frustrations in Europe, Elders’ key label Foster’s increased worldwide sales by 17%, Elliott said. Profit from beer rose 23% to $408 million.