E-Malt.com News article: 3147

UK: SCOTTISH & NEWCASTLE traded lower on the view that the performance of the Foster’s and Kronenbourg brewer is likely to lag that of its brewing competitors.
The Edinburgh-based blue chip drew negative analyst comment on Monday from Panmure Gordon, which cited evidence of a fall in like-for-like British lager sales during the summer in repeating its “sell” advice.

Downward pressure came from a different quarter yesterday (24 aug) as a sweeping ban on beer advertising in Russia, the home of S&N’s BBH joint venture with Denmark’s Carlsberg, became law. Beer advertisements on radio and television are banned between 7am and 10pm.

However, it was Citigroup which was largely behind yesterday’s 2 per cent retreat, after repeating its “sell” recommendation. Nadja Schaufele, beverages analyst, commends the restructuring strategy of its UK operations being pursued by Tony Froggatt, chief executive, which should lift earnings per share growth from 4.3 per cent to 8 per cent over the next four years. However, with that growth driven by cost savings, she thinks the underlying improvement is not sustainable over the longer term and believes that other brewers offer better growth prospects.

Further, Ms Schaufele says BBH has so far proved a disappointing investment, while there is a chance that S&N could make an acquisition that will destroy shareholder value — perhaps entering the auction for Mahoul, the Spanish brewer behind San Miguel that is expected to be put up for sale in the first half of next year.

With Citigroup also suggesting that a bid for S&N is unlikely over the next 12 months, countering persistent speculation of a move from the likes of SABMiller, up 4p at 684p, or Anheuser Busch of the US, S&N shares fell 71p to 3931p.

The FTSE 100 tracked an opening rally on Wall Street to sport a 16-point advance by the mid-afternoon but, hampered by selling of miners amid a retrenchment in metals prices, closed a modest 2.2 points ahead at 4,407.5

WPP Group firmed 5p to 498p as media analysts continued to mull over Friday’s first-half results from the advertising agency and its chances of success in bidding for Grey Global of the US. Investec Securities repeated its “hold” advice, citing disappointing guidance on margins. However, Sir Martin Sorrell, chief executive, yesterday declared the purchase of 200,000 shares at 495p.

Man Group, the world’s largest quoted hedge fund manager, off 8p at L13.37, is expected to make a weak start today after last night’s after-hours disclosure that the net asset value of its AHL Diversified Futures fund — which accounts for $10.3 billion of its $38.5 billion of assets under management — fell 2.43 per cent on the week.


NEW YORK: Stocks ended a little higher after a mixed session, helped by lower oil prices, with the Dow Jones industrial average closing up 25.60 points at 10,098.60


27 August, 2004