Goldman Sachs lifts Woolworths earnings forecast

MELBOURNE - Goldman Sachs JBWere has raised its earnings forecasts for Australian grocer Woolworths Ltd after shareholders in its takeover target, Foodland Associated Ltd, voted for the break-up and sale of their company.

Woolworths will take control of Foodland's New Zealand grocery business and 20 stores and two development sites in Australia, while Metcash Trading Ltd takes the rest of the Foodland business.

Goldman Sachs JBWere said in a research report that it had raised its forecast for Woolworths fiscal 2006 earnings by 4.8 per cent to A$1.017 billion ($1.1 billion) and its forecast for fiscal 2007 by 10.4 per cent to A$1.238 billion.

It said it expected Woolworths to extract benefits from the acquisition through cost cuts and improved buying terms of A$16 million in fiscal 2006, A$37 million in 2007 and A$47 million in 2008.

Woolworths shares closed at A$16.30 on Wednesday.

- REUTERS