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Lion Nathan is toasting a long hot summer and Steinlager Pure beer for returning its New Zealand operations to growth after two flat years.
New Zealand operating Ebit (earnings before interest and tax) rose 4.2 per cent to $54.8 million during the first half of the year.
The
Australian-based company said its half year group operating net profit rose 7 per cent to A$167.7 million ($209 million). It said strong revenue growth overall in the first half would continue, with a "significant step up" expected in 2009.
In New Zealand volumes rose and revenue was driven up by brand growth, especially premium brand Steinlager Pure, which went on sale last year.
"An unusually hot summer along with the timing of Easter trading also assisted the result," the company said.
Lion Nathan last week said it would raise prices in New Zealand from July 1 to cover annual excise increases and because of higher costs of production and distribution. Beer prices will go up by about 5.5 per cent and spirit prices by 5.3 per cent. Yesterday it warned costs, including malt, sugar and packaging, would rise in the second half and again in 2009. New Zealand managing director Peter Kean said he did not expect drinkers to be deterred by price rices which had been restrained in the past few years by competition.
"It's not like consumers have been hit year in and year out," he said.
Beer sales make up more than half of New Zealand revenue and while Steinlager Pure was the standout, other products had been strong contributors to the result, Kean said.
Wine volumes increased 8.8 per cent with Delegats Varietals, Oyster Bay and Imprint brands leading the growth. The wine portfolio was added to by the acquisition of three champagne brand agencies to replace the Moet brand agency which ended in February.
Ready-to-drink products including McKenna Bourbon, Smirnoff and Coruba pushed up RTD volume growth by 23 per cent.
Kean said in June Lion would launch a Speights lager and there were plans to export Steinlager Pure to Australia later this year and then Britain, the United States and parts of Asia. It is already sold in Hawaii.
Overall packaged beer volumes continued to grow more than 6 per cent but tap volumes declined almost 7 per cent, a major factor in the Lion Red volume decline of around 5 per cent.
Spirits volumes fell 9 per cent because of heavily discounted parallel imports and discounting on competitor brands.
In Australia, Lion Nathan chief executive Rob Murray said he was comfortable with analysts' forecasts for 2009 which centre on a 12 per cent increase in net profit to A$307 million.
This would be partly due to an increase from sales of beers from its premium James Boag label - bought in November - and the completion of brewery upgrades.
Japan's Kirin Breweries owns 46 per cent of Lion Nathan.
Lion shares in New Zealand closed up 42c at $10.62.
