Warnings by brewers send shares reeling

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The Independent Online
DOWNBEAT trading statements at annual meetings held by Scottish & Newcastle and Greene King, two prominent brewers and pub operators, sent shivers through the drinks sector yesterday.

Both warned that beer sales were not recovering in the wake of last year's overall 7 per cent decline in the UK market.

Their observations were echoed by Courage, which said a difficult market was being hindered further by poor weather. Allied-Lyons said beer sales were down in Scotland although its overall beer sales had risen.

Beer accounts for about 40 per cent of S&N's business, plied through its own 2,000 pubs and more than 5,000 free-trade accounts in Scotland. Greene King has 820 pubs and sells to 3,000 free-trade outlets, mainly in East Anglia and the South-east.

S&N's shares fell 29p to 390p after Sir Alick Rankin, chairman, told shareholders: 'We are facing market conditions which are unusually difficult. The company's underlying strengths are well recognised, but they cannot be expected to overcome all the negative aspects presented by today's climate.

'It is now of concern to us that the economic weaknesses particularly associated with the South-east are beginning to impact further north and in Scotland.'

Analysts downgraded profit projections for S&N after the meeting. Geof Collyer, at County NatWest, cut his pre-tax profit forecast from pounds 239m to pounds 226m for 1992/93 and by pounds 21m to pounds 240m for the following year.

Greene King's shares lost 21p to 423p, with Simon Redman, chairman, saying 'trading conditions have, if anything, deteriorated in the last two months, after some improvement in May and June'.

After the S&N meeting, Sir Alick said he thought that market-makers had over-reacted to the news, which underscored the fact that consumers were not spending. 'We have not misled analysts, and what matters is what analysts think.'

Brian Stewart, chief executive, added that most of the company's problems were confined to the beer market.

He underlined Greene King's comments about spring and summer trading, but said it was 'difficult to unscramble the reasons' behind the results. Poor weather had played a part. June was good, but July and August, exceptional summer months in recent years, had been dull and wet.

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