Brewer makes finance check

JOHN SHEPHERD

Financial controls are under review at Carlsberg Tetley after errors were unearthed in its take-home operation, which accounts for 20 per cent of sales.

The problems were discovered in April, a month before the brewing joint venture owned by Allied Domecq and Carlsbergshocked analysts by announcing a 21 per cent drop in profits to pounds 67m for the financial year to March. The fall in sales was particularly marked in the second half of the year.

A spokeswoman for Carlsberg Tetley said a full investigation was carried out when the errors were discovered. She said that no fraud or malpractice had been discovered, and nobody had been dismissed.

Gordon Whitehead, previously employed at Allied Domecq Retail, recently became finance director, replacing Hardy Thoegersen, who has returned to Carlsberg in Copenhagen. The change of finance directors was agreed when the joint venture was formed three years ago and is unconnected with the errors.

The company declined to specify how much of the profits fall resulted from the accounting errors.

"There was an over-estimation of profits and substantial shortfall in expectations," the spokeswoman said.

She added: "We have reviewed our procedures." The 21 per cent profits fall made it "necessary to carry out a strategic review."

Michael Jackaman, chairman of Allied Domecq, recently warned shareholders to expect further cost cuts at Carlsberg Tetley due to the brewing industry's over-capacity problem.

Analysts immediately responded by increasing their estimates of the cost of reorganising Carlsberg Tetley and other Allied businesses from pounds 30m to pounds 40m. One analyst contacted yesterday said the figure could well rise to pounds 50m in the light of the problems at Carlsberg Tetley.

An industry source also said yesterday that Carlsberg Tetley might soon have to close a brewery to counter the effect of declining sales.

Carlsberg Tetley is being hit by the difficult conditions in the pub market, which are being compounded by the industry's capacity to be able to brew 25 per cent more beer than it can sell.

Carlsberg Tetley has already had one round of redundancies, reducing its headcount last year by 530 jobs.

That was equal to 10 per cent of the workforce employed at breweries in Northampton, Burton-on-Trent, Leeds, Warrington, Wrexham in Wales, and Alloa in Scotland.