FOSTER'S Group Pacific Limited's group operating profit before income tax dropped by 34.9 per cent to $6.039m this year from $9.277million last year.
The company says the decrease was mainly driven by the increase in cost of sales by $4.6 million (8.9 per cent) over last year.
And that increase, it attributed to the one-off $1.026million write-down of bottles and crate fraud, and the $0.389million write-down of spare parts stock write off (both in its Samoa operation); and commodity cost increases driven by the high Australian dollar.
Another driver of the decrease in operating profit, it said was the increase in selling, marketing and distribution costs totalling $0.767million — that because of increased investment in brand advertising, trade promotion activities and trade marketing to support its brands.
The company's annual report released from the South Pacific Stock Exchange (SPSE) yesterday said those cost increases were partially offset by a decrease in administration expenses of $0.211 million.
Overall, it reports consolidated sales revenue increased by 3.4 per cent ($4.653million) this year from $2.087million last year.
Consolidated sales volume increased by 1.5 per cent to 3.352 million nine-litre cases this year from 3.301 million nine-litre cases last year.
In his report, FGP's chairman John Murphy said during the year, their businesses continued to face many operational issues and challenges.
He said sales demand and growth was modest, constrained by domestic economic and market conditions, while costs of production continued to increase, driven by the high Aussie dollar on imported raw materials and fuel prices.
"Our business in Samoa incurred one-off costs in relation to a fraud incident and a spare parts impairment charge. I am pleased to report that the fraud incident has been fully investigated and remedial action has been taken to prevent a re-occurrence, including a significant strengthening of our internal controls," Mr Murphy said.
FGP's outlook for 2013 and beyond, he said would largely be determined by continued growth in the Fijian economy as well as further recovery in the global economy.
He said a main focus for 2013 and beyond would be "unlock the growth potential of the local and export markets" for beer and rum via an increased capital investment program.
"This will provide the essential plant and equipment upgrades needed to improve our business efficiencies and capability to enhance our ability to compete in export markets," Mr Murphy said.
FGP is a stock listed on the South Pacific Stock Exchange (SPSE).