700m hit drives S&N deep into red

THE largest British-owned brewer, Scottish & Newcastle, today unveiled full-year losses of 272 million after swallowing exceptional losses of nearly 700 million.

Some 458 million relates to the loss on the sale of Center Parcs and Pontin's, including writing back 160 million of goodwill previously written off, and 122 million went on the restructuring of brewing activities. A further 84 million relates to the anticipated loss on pubs yet to be sold.

Before the exceptional item, profits for the year to 29 April were 4.6% ahead at 427.5 million on sales up 22% at 4.35 billion.

Chief executive Brian Stewart said: "The last year has seen enormous change in the scale, scope and potential of the company. The UK beer market is performing really well. While it is early days the indications are the retail estate is trading very strongly, while international beer's first-time contribution has transformed the shape of S&N."

In the UK beer market operating profits were 6.5% ahead at 194 million despite a 1% drop in sales. Growth was driven by the big- name brands including Foster's, Kronenbourg and John Smith's.

Volume sales for the leading brands were up by 4.2% although the whole portfolio was down by 0.6%. But this was still better than the national decline of 2.6% for all beer.

Stewart said trading in the early weeks of the current year had "done nothing to dampen our confidence that we can meet shareholders' expectations".

Following the acquisition of Danone's beer operations last year, Scottish & Newcastle pushed international beer sales from 68.4 million to 779.8 million producing a profit of 70.5 million compared with 8.8 million last time. But sales of Kro-nenbourg were down by 2.5% in France due to a poor summer last year and a deliberate strategy of reducing low-volume sales.

Following a strategic review S&N decided to keep pubs as an integral part of its business alongside brewing. Managed pubs, which include the Premier Lodge and Chef & Brewer pub restaurants, increased profits by 4.1% to 244.9 million.

Stewart said like-for-like sales in the pubs not being kept were 6.8% ahead and only 40 of the 740 pubs identified for sale have yet to find a new owner.

Earnings per share declined by 4.4% to 48.2p as new shares issued for the Kronenbourg acquisition last July come into circulation. A final dividend of 18.66p lifts the total payout for the year by 4% to 28.16p.

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