Kirin Brewery comments boost Lion Nathan shares

TOKYO - Kirin Brewery, Japan's second-biggest brewer by volume, said yesterday it wants to raise its stake in Australia's second-largest brewer, Lion Nathan, from the current 46 per cent.

The comment boosted shares in Lion Nathan by as much as 5.3 per cent in afternoon trade. Lion shares closed up 39Ac, or 4.76 per cent, at A$8.64.

Lion Nathan has been a profit driver for Kirin, which faces intensifying competition with rivals Asahi Breweries and Sapporo Holdings in a shrinking domestic market.

The Australian company accounted for 23 per cent of Kirin's consolidated operating profit in 2005, up from 21 per cent in 2004.

Kirin is still waiting for a chance to increase its stake, but no timing for such a move has been set, incoming Kirin president Kazuyasu Kato said.

"Their business is attractive, and we would consider [raising the stake] when the time is right," he said.

But he added: "We do not intend to launch a hostile takeover.

"We respect their management ... we do not intend to change the current management or raise the stake, no matter what."

Kato also said the company wanted to eventually invest more in San Miguel, Southeast Asia's largest food and drinks group, in which Kirin owns 20 per cent.

Kato also said Kirin's profits in 2006 had exceeded expectations thanks to demand for its low-malt happoshu and cheaper beer-like drinks.

Kirin has forecast that it will post 4.7 per cent growth in its consolidated operating profit this year to 117 billion yen ($1.53 billion) on sales of 1.67 trillion, which would be up 2.3 per cent from a year earlier.

Kirin has been closing the gap on industry leader Asahi Breweries as its beer-like drink product "Nodogoshi Nama" has shown strong growth while it continues to lead the market in the low-malt happoshu category. These products are cheaper than regular beer because of lower tax rates.

- REUTERS