Severe Weather Makes Life Difficult for S&N ; In Association With RBS

BREWERS Scottish & Newcastle warned its trading targets for this year looked “very challenging” after the wet July weather dampened customers thirst for beer and cider.

The group behind Newcastle Brown Ale, Foster’s, Kronenbourg and John Smith’s said the severe weather had led to “significant difficulties” in the UK market.

The update came as the group posted pre-tax profits of pounds 191m, up 5.5% on last year, but below analysts’ forecasts of around pounds 206m.

The firm outperformed the UK beer market during the six months to the end of June, as branded beer volumes fell by 3.9% compared to an overall market decline of 5.2%.

Cider performed particularly well, with market share gains from its mainstream Strongbow brand as well as in the “over ice” market following continued heavy investment in the period.

Strongbow revenues grew by 16.4% as volumes rose 12.9%, which helped secure a slight rise in UK revenues of 0.4% to pounds 855m.

Strong growth of the premium Bulmers Original, Strongbow Sirrus and Jacques brands helped the group achieve a 26.2% share of the “over ice” sector. The performance contrasts with Dublin’s C&C, which has warned on profits after disappointing sales for its Magners brand.

Scottish & Newcastle said it expects to see the UK beer market decline by between 1% and 2% along with slower growth in cider during the second half, as the impact of the smoking ban exacerbates weaker sales during July.

Chief executive Tony Froggatt said: “The continuation into July of exceptionally adverse weather, in the UK and France in particular, will make the achievement of this year’s trading targets very challenging.”

Performance in France was also impacted by a brewery strike and tough trading conditions at its wholesale business.

Group profits were boosted by a strong international performance with operating profits up by 63.3% in Russia as beer volumes grew by 30%.

The company also grew its Sagres beer brand in Portugal and benefited from double-digit volume growth in China and India.

(c) 2007 The Journal – Newcastle-upon-Tyne. Provided by ProQuest Information and Learning. All rights Reserved.