Chinese torture continues for brewer

Brewer Lion Nathan yesterday wrote down its China businesses by $A120 million ($158 million) and all but gave up on achieving decent returns in the "foreseeable future."

Lion said, when announcing 13-month results, that overcapacity in China had hit prices and caused inefficient use of plant.

Several foreigners - including rival Fosters - have quit China, but Lion is not quite at that stage yet.

"Lion Nathan believes that structural changes are required to the market before the industry can hope to realise adequate returns," said chief executive Gordon Cairns.

"It is involved in exploring how it might participate in the changes which need to occur."

Options were being considered, but it was too early to be specific about "the likely outcome of these discussions."

"It is unlikely the business will achieve an adequate return on the funds employed in the foreseeable future."

Mr Cairns said talks would continue with several partners over rationalisation.

Lion made a net profit - after the writedown - of $A3.7 million for the 13 months to September.

The company updated the 12-month profit to mesh with the balance dates of its main shareholder, Japanese brewer Kirin.

Despite the writedown, Lion's share price closed up 30c at $5.50.

It was the first time the share price had gone above the $5.40 price Kirin paid in April 1998.

Lion's Chinese experience has been something of a fading dream turning to nightmare.

Since entering the market in 1995, it has never made a profit in China

- NZPA