S&N rises on all fronts

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The Independent Online
SCOTTISH & Newcastle, regarded as one of the most resilient of brewing companies, increased taxable profits by 2 per cent to pounds 221m in the year to 3 May.

Operating profits at S&N, brewer of McEwan's Export, Newcastle Brown Ale and Theakston's beer, increased in each of its businesses - brewing, retailing in pubs and as owner of the Center Parcs and Pontins holiday resorts.

S&N said it was particularly pleased with the performance of its premium brands like Beck's lager and Theakston's real ale.

S&N has benefited from its northern geographical bias. However, Sir Alick Rankin, the chairman, said: 'We have yet to see any sustained signs of economic recovery.'

Overall operating profits were 6 per cent ahead, but a bigger interest bill - incurred completing the purchase of Center Parcs - restricted the advance at the pre-tax level. Year-end borrowings were pounds 307m compared with pounds 296m but, as a proportion of shareholders' funds, were the same as last time at 23 per cent.

S&N, which recently appointed Brian Stewart as chief executive, has also been well placed to deal with changes in the brewing industry in the wake of the Monopolies and Mergers Commission's investigation. Its tied estate of public houses is below the 2,000 threshold and it is strong in the supply of beer and lager to the free houses, a sector of the market encouraged by the MMC's report.

S&N sells 80 per cent of its beer to the free trade and hopes to increase its penetration of that market.

However, lending to free traders left S&N obliged to set pounds 12m aside as provision for doubtful debts. Last year it provided pounds 5.5m.

Earnings per share are 36.4p compared with 34.1p. The shares rose against a backdrop of generally depressed stock prices. They closed up 3p at 463p supported by a 16.1p total dividend, 7 per cent up on last year's 15p.

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