Lion Nathan forecasts net profit of $255-260m

Beer and winemaker Lion Nathan Ltd today reported a net profit of A$160.1 million ($177.3m) for the year to September 30, 2004, down 11 per cent on the previous year, as it was hit by writedowns in its wine business.

However net profit after significant items was up 12.5 per cent to $202.7m.

It forecast a net profit from operations for the current year to come in between A$230-235 million ($255-260m).

Lion Nathan's significant items included a profit of A$104.1 million from the sale of its Chinese beer business, a loss of A$34.2 million from the sale of its Victorian hotel portfolio, HMC, and a A$71.5 million writedown in the carrying value of its Australian wine business.

The net financial impact of those items was a loss of A$42.6 million.

However the company pointed to its underlying double digit earnings growth as a sign that the business was performing solidly.

"Lion Nathan is confident that the underlying earnings momentum of its existing businesses can be maintained into the 2005 fiscal year," the company said in a statement.

"At this early stage of the year, it is difficult to be too specific, however net profit after tax (from operations) in the current year should be within a range of A$230 million to A$235 million."

Lion Nathan declared a final dividend of A15 cents per share from 14 cents previously, taking total dividends for the year to 29 cents per share, fully franked, up from 27 cents.

Total earnings before interest, tax and amortisation (EBITA) across the group were up four per cent to A$423.4 million.

Lion Nathan said its Australian beer business performed well, but New Zealand and China experienced "challenging competitive environments".

The Australian beer business - which includes brands Tooheys New, Hahn Premium Light and XXXX Gold - achieved EBITA before significant items of A$352.9 million, up seven per cent.

Lion Nathan said the outlook in the Australian beer business was positive.

"The strategy to increase investment to grow its higher margin core brands will remain an imperative, as will the continued development of its premium brand portfolio," Lion Nathan said.

New Zealand EBITA declined by six per cent to A$82.3 million, blamed on competitive conditions.

"While market conditions remain challenging, the New Zealand beer business is expected to grow modestly in the 2005 fiscal year," the company said.

"This will be driven by an increased investment behind the core brand portfolio, a continued commitment to reduce costs and a generally better pricing environment than the first half of the 2004 fiscal year."

The China beer business EBITA fell 37 per cent to a loss of A$8.5 million.

In September, Lion Nathan exited its China business, selling it to the second largest brewer in China for A$US154 million, which at the time was A$A219 million.

The wine and spirits division achieved a vast improvement, bringing in EBITA of A$19.2 million compared to just A$3.1 million the previous year.

Lion Nathan also said today that it had managed to reduce its debts during the 2004 financial year.

Net debt levels were reduced to A$1.282 billion by the end of the year but have since fallen further after receiving the sale proceeds of the China business.

Gearing improved from 58 per cent to 50.5 per cent over the year.

Lion Nathan shares last traded in New Zealand at $8.58.

- AAP