S&N raises a glass to 'encouraging' growth

SCOTTISH & Newcastle has seen operating profit and revenues grow despite the "substantial challenges" of the smoking ban and bad summer weather.

The Edinburghbased brewer said it was "very encouraging" that it had still enjoyed revenue growth of 7.9 per cent in 2007 despite the challenges in the industry, coupled with the distraction of the takeover bid by Carlsberg and Heineken.

As well as sales rising to £4.15 billion, operating profit grew by 5.7 per cent to £560 million. But pretax profits came in at £444m, the same as in 2006.

The main drivers of growth for the brewer of international brands including Foster’s and Kronenbourg were the cider market and its operations in Russia.

The company has invested heavily in its Bulmers Original as a rival to Magner’s.

Cider sales for the company increased by 21.2 per cent, with Bulmers, Strongbow Sirrus and Jacques now commanding a 27.8 per cent share of the premium packaged cider market.

Baltika brewer Baltic Beverages Holding, which S&N owns a 50 per cent share of with Carlsberg, also saw sales grow 43 per cent.

John Dunsmore, S&N’s chief executive, said: "In the face of substantial challenges in terms of unprecedented bad summer weather, the UK smoking ban and the distraction of the consortium approach, it is very encouraging that S&N’s outstanding portfolio has still delivered."

The results, for the year to the end of December 2007, are expected to be the last posted by S&N as an independent company, as Heineken waits for shareholder approval for its joint £7.8bn offer with Carlsberg for S&N.

But when the Dutch firm does assume control, it will be inheriting difficult UK market conditions, with S&N saying its branded beer and cider market grew by only 1.7 per cent domestically.

In the current year, S&N expects to improve on its core western European markets, aided by anticipated better weather than last year.

Meanwhile, Carlsberg posted its own results today with operating profits for 2007 coming in higher than expected at £536.1m – up 30 per cent on the year before. Sales rose nine per cent to £4.53bn.