E-Malt.com News article: 3046

UK: Scottish & Newcastle Plc expects to meet its full-year targets, Britain's biggest brewer said on Tuesday, August 3, as it met forecasts with an 8 % rise in underlying first-half profit. "The good performance in the first half gives us confidence that we will meet our financial and commercial objectives," Chief Executive Tony Froggatt said. Profit before tax and exceptional items rose to 158 million pounds ($289 million) in the six months to end-June on turnover up 4.2 percent to 2.38 billion pounds. Analysts' forecasts were in a 155-165 million pounds range.

The brewer of Baltika and Foster's beers in Europe has expanded quickly in the past four years, buying Kronenbourg and Finland's Hartwall to be the No.1 brewer in France and Russia as well as Britain. It has also been cutting costs and said on Tuesday it was on course for 60 million pounds of savings from a restructuring of its British brewery business.

The results comparison was complicated by the fact that S&N changed its year-end to December from April, by the sale of its managed British pubs estate in the second half of 2003 and by its acquisition of Bulmers Cider in Britain, Froggatt said.

S&N shares, which have outperformed the beverages sector by 8 percent this year, were up 0.7 percent at 404 pence by 0750 GMT to value the company at 3.8 billion pounds. "The real test for (British brewing unit) Scottish Courage will come in the second half, when comparatives toughen substantially after a heat wave in Europe last summer," SG Securities analyst Javier Gonzalez Lastra said. Froggatt said trading in western Europe in July had been weak due to disappointing weather conditions.

But in eastern Europe, second-half net margins at its BBH joint venture with Carlsberg should benefit from reduced marketing expenses and sales volume momentum, he said. S&N's total marketing spend rose 15 percent during the first half, Froggatt said without giving the actual amount.

As for further cost savings, S&N said property disposals over the next couple of years, largely land from planned brewery closures, should raise at least 100 million pounds. S&N, which paid a previously announced 200 million pounds into its pension fund during the first half, sold 76 million pounds of trade loans to its customers to British banking group HBOS.

SG's Gonzalez Lastra said the loan sale showed "how much in need of cash S&N is to make its dividend distribution" after the pension fund contribution. S&N's interim dividend was raised 2.5 percent to 6.87 pence.


04 August, 2004