Brewer forecasts better returns from local arm

Transtasman brewer Lion Nathan is confident its New Zealand unit, Lion Breweries, will perform in the 2005 financial year.

Spokesman James Tait said Lion Breweries, which markets Lion Red, Speights and Steinlager, would contribute its share to the group's 2005 net profit guidance of $230 million to $235 million.

This despite beer shipments falling 4.3 per cent in the first quarter of the 2005 financial year, the three months to December 31.

"The mainstream beer market in New Zealand has been challenging against the backdrop of an ongoing premiumisation of the overall market," Tait said yesterday.

"Within that context, the fact that Speights is in growth is a significant achievement. Accordingly, the outlook for our premium brands is positive - all of which are experiencing solid growth."

Tait added, referring to all of Lion Nathan's operations, that "you can see [from the profit guidance] from that we have confidence in the long-term health of the business".

Tait's comments came after the head of Lion Breweries, Julian Davidson, resigned amid market concerns about the health of the New Zealand brewing operations.

Lion Nathan said Davidson had decided that it was time for a change after three years at the helm. His resignation had nothing to do with the New Zealand unit's performance.

He would be replaced by Lion Nathan's Kiwi wine and spirits boss, Peter Kean.

Transtasman analysts said their concerns about Lion Breweries' performance were linked to the New Zealand economy, smoking bans, imported beverages displacing Lion's sales volume and increased competition for market share.

At 5pm yesterday, Lion Nathan shares were unchanged at $8.10, having gained more than 21 per cent in the past year.

- NZPA