Drinkers' thirst boosts S&N

BREWER Scottish & Newcastle expects profits for its UK business in 2004 to beat last year's thanks to better than expected trading in the pubs industry.

The company, whose brands include Foster‘s, Kronenbourg and John Smith‘s, said it was expecting operating profits from the UK Scottish Courage business to come in slightly ahead of last year‘s £148m. The business made £57m in the first six months of the year.

The group also said it expected cost savings of some £60m a year from the UK business by 2006 as a result of its restructuring measures, against previous estimates of £45m. It recently announced the closure of its Fountainbridge and Tyne breweries in Edinburgh and Newcastle with the loss of nearly 300 jobs.

It said overall trading in the first six months of the year in all its key businesses had been better than the same period last time, when sales were affected by the impact of the Iraq war on consumer confidence.

'We are well positioned for further growth in 2005,' the company said. S&N is now focused on its brewing in the UK and continental Europe following the sale of its managed pubs for £2.5bn.

As well as its 27% market share in the UK, the group has market leading positions in 12 other European countries.

It said the beer market in Western Europe was more 'robust' than a year before and reported promising growth for its Eastern Europe subsidiary Baltic Beverages Holdings. 'BBH's most important markets in Russia and the Ukraine continue to demonstrate robust growth,' the company said. 'BBH remains confident in the prospects for its markets and believes that it is well positioned for good volume and profit growth in 2004.'

Analysts are looking for full-year pre-tax profit of £378m. The shares fell 4p to 435 1/2p by mid-morning.