Shares surge in wine group Southcorp

SYDNEY, Australia (CNN) -- Shares in Australian wine group Southcorp surged almost 8 percent Tuesday after it posted a net profit of Aust. $312.7 million ($170 million) for the year to June 30.

That was a 45 percent gain compared with A$215 million ($117 million) for the previous year, but the 2001-02 result included an after-tax profit of $137.5 million from the sale of the group's water heater business.

Southcorp, the No. 2 Australian wine group behind Foster's Group, has a stable of wine labels that includes the Penfolds, Rosemount, Lindemans and Wynns brands.

Southcorp said total sales in 2001-02 were A$2.0 billion ($1.09 billion), up 20 percent from the previous year. It said that mainly reflected the reduced contribution from divested businesses.

Sales in its wine business rose 21 percent to A$1.5 billion, with volume to the U.S. up by almost 26 percent.

Challenge ahead

Southcorp chief executive Keith Lambert said operating conditions in the year ahead were likely to remain challenging.

But he said the group was well-placed to lift volume by 10 percent or more, leading to "sustained earnings growth".

Southcorp shares closed at A$5.69, up 7.97 percent. The broader market, measured by the S&P/ASX200, put on 0.9 percent.