Bottom Line: Brewers raise glasses

THE theory that regional brewers would be forced into mergers to survive the Government's Beer Orders looks unduly alarmist in the wake of solid figures yesterday from Marston, Thompson & Evershed and Mansfield Brewery.

Marston lifted pre-tax profits by 16 per cent to pounds 23.3m, and Mansfield advanced 14.4 per cent to pounds 14.4m.

Both are quietly building brands, expanding their pub estate through selective purchases and increasing higher margin food sales.

Mansfield's performance is even more creditable, given the devastation of the mining industry and its accompanying hard core of male drinkers. A 14.3 per cent dividend increase to 4.4p says something about the confidence of management.

Earnings per share growth will be slowed this year by a rising tax charge. Even so, a p/e of 12 at 203p, assuming pre-tax profits of pounds 15.3m, is undemanding.

Marston at 270p are certainly undervalued. Profits of pounds 25m this year give earnings of 20.4p, and a p/e of 13. The yield is 3 per cent.

While enforced mergers may be off, figures like these could well raise the acquisitive sights of the likes of Wolverhampton & Dudley, or even Whitbread.

(Graph omitted)