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Foster's chief quits amid tough times

Published:  23 July, 2008

Foster's chief executive Trevor O'Hoy has quit.

The Foster's board accepted the resignation of O'Hoy, who had been in position for more than four years.

In that time he led the Australian brewer through structural change, including the acquisition of Southcorp Ltd in 2005 and the divestment of non-core assets.

O'Hoy has agreed to stay on and help during the transition until a successor has been appointed.

Foster's is experiencing tough times as global economic conditions begin to bite.

Analysts have argued that its wine business, which accounts for 35% of total revenues, had been causing difficulty since the 1.75bn ($3.5bn) acquisition of US-based Southcorp.

The business, with brands including Beringer, Rosemount, Penfolds and Lindemans, has struggled amid a slowing US economy.

David Crawford, Foster's chairman said that the integration of Southcorp had been a cause for concern.

He said: Trading conditions have been tough and the continued strength of the Australian dollar has hit us hard.

The reality is we did not execute the Southcorp integration as well as we expected and operating conditions are now more challenging.'

Crawford also admitted that Foster's paid too much to acquire wine assets.

Angus Gluskie, White Funds portfolio manager said that O'Hoy's resignation was not unexpected given the hard time he had received but that many issues affecting Foster's were industry wide.

Crawford added: Our challenge is to drive improved financial returns from wine and to exploit the growth potential of our leading portfolio of global wine brands.'

A worldwide search is now under way to identify O'Hoy's successor.