E-Malt.com News article: 4701

United Kingdom: One of the world’s largest beer makers, Scottish & Newcastle, which accounts for 27 % of the beer market in the UK, announced on April 13 it believed it could achieve organic sales growth (stripping out acquisitions) of 3-5 % per annum. The group, which is closing two breweries, at Fountainbridge in Edinburgh and in Newcastle, said it was confident it could also deliver continued improvements in net operating margins through greater efficiency, Business Scotsman posted on April 14.

The comments were made at a marketing seminar in London, where Stephen Glancey, S&N’s operations director, spoke of the opportunities for further efficiencies in areas such as procurement, manufacturing, distribution and research and development.

At the seminar, Britain’s biggest brewer would not comment on current trading other than to say it was in line with comments made at the announcement of its annual results in February. Then, S&N, whose brands include Kronenbourg, Foster’s and John Smith’s, reported an 11 per cent rise in underlying profits to £373 million.

A theme of the year was strong performances in the UK and Russia helping to offset flat trading in western Europe. It said at that time that, while its UK business was set to grow, its European divisions would have a subdued performance due to weak consumer confidence.

Nigel Popham, brewing analyst at broker Teather & Greenwood, said S&N’s statement on trading had been expected. However, he said targeting 3 to 5 per cent organic sales growth was "fairly ambitious" and thus "quite positive".

In February, Scottish & Newcastle reported 2004 profits in line with expectations. The group said then that sales volumes of its top four brands had risen by 4.5 per cent in the UK , pushing operating profits from its biggest region up by 11 per cent on a year earlier. Overall, group profits before one-off items were in line with market hopes at £373m, compared with the £336m seen in 2003. When including the sale of 1,400 pubs in 2003, profits were down on £471m previously. S&N, which accounts for 27 % of the beer market in the UK, said that while its UK business was set to grow its European divisions would have a subdued performance due to a weak consumer confidence outlook.

Scottish & Newcastle shares closed up 1p at 488p yesterday. The stock has outperformed the benchmark FTSE 100 index by 8 per cent since the start of 2005. However, broker Panmure yesterday suggested to investors that they take profits on the recent rise in S&N’s share price.


17 April, 2005