China proves expensive beer for Lion

By Phil Boeyen, ShareChat Business News Editor

Friday 10th November 2000

Brewer Lion Nathan has taken a $120 million charge on its unprofitable brewing business in China, sending its net profit after tax tumbling to $A3.7 million for the 13 months to the end of September.

Operating profit before abnormal items was up just 0.9% to A$123.7 million on the back of a 12% improvement in sales to A$1.6 billion.

The company has confirmed a final fully franked dividend of A8 cents per share which was flagged last month.

The company says performance from China continues to be less than satisfactory and the A$120m charge will cover the rationalisation and restructuring of the its operations there.

Lion says it remains committed to operational improvement and to pursuing options to bring about structural improvements in the Chinese beer market and maximise shareholder value.

Figures last month from Lion showed its beer volumes had fallen 30% in China compared with last year, with continued over capacity leading to an unsatisfactory pricing environment.

Despite the challenging market in China Lion says the current 'profitable growth' momentum from the Australasian brewing businesses should be maintained in the current year.

The company says it had strong cash flow from operations in the 13-month result, up 32.6% to A$357m, which continues to reinforce financial strength, and it has highlighted its New Zealand Liquor subsidiary for delivering strong earnings growth, up 16.4% in New Zealand dollars compared with last year.

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