Lion Nathan lifts full-year profit forecast after first-half gain

Wednesday 20th May 2009

Lion Nathan, the Australasian brewer facing a takeover by major shareholder Kirin Holdings, lifted its full-year earnings guidance after stronger beer sales lifted first-half profit by 6.9%.

Net profit rose to A$176 million in the six months ended March 31, from A$164.6 million a year earlier, the Sydney-based company said in a statement. Sales rose 5.7% to A$1.19 billion. Australia’s second-largest brewer raised the bottom end of its full-year profit forecast. Earnings are expected to be between A$305 million and A$315 million, from a previous estimate of A$300 million to A$315 million.

“Our key beer markets remain healthy and with limited exposure to the more volatile wine market, we are well placed to thrive in the current environment,” said chief executive Rob Murray. “These first half results show the resilience of our business.”

Kirin last month offered to acquire the 54% of Lion it doesn’t already own, tapping strong demand for beer as sales flag in its home market of Japan. It will gain control of brands including Steinlager, Lion Red, Speight’s, Macs, XXXX, Tooheys, Becks and Hahn beers, St Hallett and Petaluma wines and McKenna bourbon. Kirin’s expansion plans also include plans to acquire 49% of the Philippines’ San Miguel Brewery, the largest food and drinks company in South East Asia.

Lion’s board is supporting Kirin’s offer to mop up the remaining shares at A$12.22 apiece, comprising of A$11.50 cash and a fully franked special dividend from Lion of 72 cents a share.

The stock rose 0.2% to A$11.70 on the Australian stock exchange, and gained 0.3% to $15.00 on the NZX.

New Zealand earnings before interest and tax rose 3.1% to $56.5, but fell in 1.3% in Australian dollar terms to A$47 million as a weaker kiwi dollar offset higher prices.

The company announced a fully franked interim dividend of 22 Australian cents, up from 20 cents a year earlier.

Wine earnings slumped 67% to A$2.8 million as consumers switched to cheaper brands.

Lion’s net debt rose 8.1% to A$1.65 billion, or 2.7 times EBITDA, from the same period in 2008, reflecting capital spending. Interest expense increased to A$61.7 million from A$47.8 million.

The brewer said its Auckland brewery was under construction, with the New Zealand operations moved into the new facility in 2011. It still predicts it will spend $250 million on the project.

Businesswire.co.nz

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