KEY POINTS:
SYDNEY - Australasian brewer Lion Nathan said today its balance sheet was looking good - apart from the New Zealand division.
The beer company's half-year net profit before one-off items rose 3.6 per cent, after a strong performance for its Australian business offset weakness in New Zealand.
Profit
before one-off items was A$156.8 million ($178 million), up from A$151.3 million a year ago. Market forecasts for earnings before one-off items centred on about A$149 million, according to a survey of four analysts.
New Zealand revenue rose 6.4 per cent. Operating earnings before interest and tax were flat at NZ$52.6 million, in line with expectations, due to input cost increases and a highly competitive pricing environment with increased costs of doing business.
The company, which brews Tooheys, Hahn, XXXX and Steinlager beers, posted a reported net profit of A$162.0 million for the six months to March 31.
Lion Nathan mainly competes in Australia against Foster's Group Ltd and in New Zealand against DB Breweries Ltd, a unit of Asia-Pacific Breweries.
Shares in the company, 46 per cent owned by Japan's Kirin Brewery Co, have added around 12 per cent so far this year to yesterday's close of A$9.07, compared with a 15 per cent rise in the broader market.
Lion revised up its guidance for full year operating net profit after tax (NPAT) slightly.
"The company has revised its operating NPAT guidance range from A$245-260 million to A$250-$260 million for the 2007 financial year," it said.
The guidance excludes the impact of one-off and significant items, most of which will be booked in the second half.
Lion said net sales revenue rose 5.3 per cent to A$1.04 billion in the first half.
Reported earnings before interest and tax (EBIT) lifted 3.42 per cent to A$264.1 million.
"Revenue and EBIT growth for the first half of the 2007 financial year reflect the benefits of brand investment and new product development," the company said.
"The result was also achieved after incurring higher commodity costs, primarily in aluminium and sugar as well as the planned investments associated with the company's ready to drink spirits (RTD) strategy, which contributed to a A$41 million increase in costs for the period."
Lion said it continues to produce consistent earnings and cash flow, while increasing investment in brand marketing and production upgrades.
But it said its stronger operating outlook, following the conclusion of Project Invest at the end of the 2007 financial year, is clouded by rising barley costs associated with drought conditions in rural Australia.
The impact is estimated at A$6 million pre-tax for 2007, which has been included in the revised guidance, and a further A$9 million pre-tax in fiscal 2008.
"Australia again drives operating results but New Zealand performing in difficult circumstances," it said.
- AAP
