![#](https://e-malt.com/Images/left_top_corner16x200.gif) | E-Malt.com News article: 1405
Shares of Lion Nathan Ltd., Australia's second-largest brewer, rose 3 % after it said its Chinese breweries will break even this year, allowing the company to meet its A$180 million ($117 million) earnings target, according to a Bloomberg reprt. Lion Nathan's Chinese brewing volumes rose 18 % in the three months to June 30, suggesting the SARS outbreak didn't dent sales much as people stayed at home during the epidemic rather than risk infection in restaurants and bars. “Three months on, (the) threat has abated,” Sydney-based Lion said.
Lion Nathan, which is 46 % owned by Japan's Kirin Brewery Co., is ending losses in China, after it started there in 1995, by adding Kirin brands to its range. It has tried for about 8 years to make a profit in China, the world's second-largest beer market, by competing with local brands.
Earlier this year, it started making beer in China for Kirin using spare capacity at its Suzhou brewery. China accounted for less than 4 percent of Lion Nathan's sales last year though it was the fastest-growing business by revenue. “With the SARS epidemic now over, volume growth has strengthened and performance is expected to be in line with previous guidance,” Lion Nathan's statement said.
Lion Nathan in December forecast earnings from operations this year will rise 11 % to A$180 million. It reiterated the forecast at its first-half results in May while saying meeting the target would depend on the impact of SARS. Like bigger Australian rival Foster's Group Ltd., Lion has responded to stagnant local beer demand by acquiring wine businesses, producing more expensive beers and cutting costs.
“It can keep earnings growing 10 % a year because its beer business, while being a low growth business, has pricing power and Lion Nathan maintains a tight control on costs,” Woolford said. “It's an excellent business.” Lion Nathan, the makers of Hahn Premium lager, was expected to earn A$179 million in the year ended Sept. 30, according a survey of nine analysts by Thomson Financial.
08 August, 2003
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