Beer Is Lion's Focus
The Age
Saturday November 10, 2001
Lion Nathan chief executive Gordon Cairns has played down concerns that the company has embarked on a shopping spree to build an Australasian wine business, but he has not ruled out more acquisitions.
``We won't be going out there spending a ton of money buying wine companies," Mr Cairns said yesterday.
He said wine was the growth area but that there was no prospect of it overtaking beer in the immediate future.
The first aim was to grow its yet-to-be-acquired targets Petaluma and Banksia organically, although the group still had enough capacity to buy more if it wanted to.
``We see the wine business being a substantial part of our revenue and earnings," he said. ``We haven't precluded down the track, as we develop a wine business on three continents, that there may be further acquisitions."
Wine will not be bigger than beer five years from now ``but it will be substantial".
Lion Nathan has identified growth in its premium beers Tooheys Extra Dry and Hahn Premium as one of the keys that saw the company post a net profit of $151.8 million in the year to September 30, 2001. This was well up on last year's $3.7 million made in the 13 months to September 2000, which was depressed by a $120 million writedown of its loss-making operations in China.
The result also includes a net gain of $64.9 million from the sale of Lion Nathan's stake in Montana to rival British liquor giant Allied Domecq. That was offset, however, by $48.5million in writedowns, including hotels and restructuring charges.
The focus on pricing and higher-margin beers pushed Australian revenue up 9.9 per cent past $1 billion. Lion Nathan's market share in Australia crept up 0.4 of a percentage point to 42.1 per cent, still substantially behind market leader Foster's.
Australian earnings before interest, tax and amortisation were $297.6 million, compared with $268.5 million for the previous corresponding period.
Mr Cairns said there was plenty of room for growth in Lion Nathan's Australian beer business.
``We still think there's significant growth opportunities in premium beer, where we're less than 30 per cent of the market," he said.
Profit from Lion Nathan's brewing operations in the 12 months to September - Lion Nathan has changed its balance date to September 30 to be in line with its 46 per cent shareholder, Kirin Breweries - was $141.5 million.
This was despite a 5 per cent fall in sales to $1.5billion.
With slower growth in the beer market, Lion Nathan has put in offers for premium-wine brands Petaluma and Banksia. So far, it has secured 76.8 per cent of Petaluma and 19.9 per cent of Banksia.
The directors declared an unchanged final dividend of eight cents a share, fully franked, payable on December 13.
© 2001 The Age
