S&N plays down takeover fears

BREWING giant Scottish & Newcastle has played down speculation that a wave of consolidation is set to engulf the European beer industry. Chairman Brian Stewart said the group was focused on European development of its key Foster's and Kronenbourg brands and would not be rushed into a deal even if a merger of key rivals threatened to leave it out in the cold.

Documents purporting to show Belgian rival Interbrew was plotting a tie-up to scupper a possible Scottish & Newcastle deal with South African Breweries and Miller were leaked last week.

Asked about the threat posed by Interbrew, Stewart said: 'We recognise the beer market is consolidating and we would have to approach every opportunity on an individual basis, but we don't see any particular threat to us and there would not be a requirement to respond.'

Key brand initiatives will see Foster's launched as a premium beer in France in January and, despite a dip in interim sales due to sales of leisure interests and parts of the pubs estate, Stewart insists the narrower focus on beer is paying off. After a lull, business has bounced back to pre-11 September levels and S&N is confident it can meet full-year expectations.

Operating profits on its UK beer operation were 5.2% higher, operating profits from international beer rose 7.8% and its managed pubs estate saw operating profits rise 7.3%. Interim pre-tax profits to 28 October fell to £184.5m on sales that slipped to £2.13bn from £2.17bn. But paying off £432m of a £2bn debt pile helped core profits edge up £2m to £242.8m.

Earnings per share fell 10% to 23p but the dividend rises 3.5% to 9.88p a share.