Lion Nathan looking to broaden wine interests

By DITA DE BONI liquor industry writer

A leaner, hungrier Lion Nathan announced a positive half-year result yesterday and spoke of big plans to acquire wine assets in New Zealand, Australia "and beyond." .

Yesterday the brewer attacked recent moves by Allied Domecq to boost its Montana holding with the purchase of chairman Peter Masfen's shares, saying Mr Masfen had abandoned minority shareholders. Allied Domecq's position in the stoush for the wine producer, it added, was "befuddled."

The talk was backed by half-year results showing a 16 per cent rise in after-tax profits on largely flat revenues. Profits of $A89 million ($109 million) in the six months slightly exceeded market estimates, while revenues topped $A795 million, up 2 per cent from last year.

Lion posted an 8c interim dividend, payable June 29, up from 6c last year. After-tax profits of $A140 million in the full year are forecast.

Factors hampering growth in the current period were largely beyond its control, the company said. A doubling of excise tax in Australia, as well as inflation and a general slowdown in the Australian economy had wiped $20 million, and tap beer consumption declined by 3 per cent as the total beer market stalled, giving the company's aggressive pitch at wine more piquancy.

While Lion increased its market share against main transtasman rival Foster's Brewing, the company had not been able to reduce costs substantially in Australia, where around 70 per cent of its business is done.

"Unfortunately, God and the Treasurer has prevented us from doing that," Mr Cairns said.

In the New Zealand market, Lion experienced slightly decreased volumes and a dip in market share against rival DB, which it said was partly the result of being the first to move from 355ml to 330ml cans.

In China, Lion keeps a small staff trying to find a buyer or partner in the operation there, but says it has decreased losses by $A2.8 million to $A12.9 million.

But any moderate growth Lion is pegging to flow from increased consumption of light and premium beer in its key Australasian markets is expected to be dwarfed by growth from wine assets the company is looking to acquire in the long term.

"Montana is the first step in a strategy to take us from New Zealand to Australia and beyond, but we will not pay inflated prices," chief executive Gordon Cairns said. When asked what he meant by "beyond," he would give no further details.

He also refused to comment on further moves on the Montana share register.

Lion now has 62 per cent of the wine maker and "we wait the positive outline of the special committee in June."