Lion Nathan on track to achieve profit targets

Australasian brewer Lion Nathan Ltd said it is on track to achieve a net profit from operations of between A$230 million and A$235 million for the 2005 financial year.

The result is before the one time A$5.8 million cost of a product recall and other one time charges.

"The performance of our Australian beer business has improved over the year and while the New Zealand beer market remains challenging, it is pleasing to confirm our previous guidance of full year NPAT (net profit after tax) from operations of between A$230 and A$235 million," chief executive officer Rob Murray said.

"This is prior to the impact of previously announced one time costs relating to the Two Dogs product recall of A$5.8 million and other fourth quarter one time charges."

Lion Nathan said total beer volumes for the group were flat for the third quarter at 188 million litres, excluding licensed XXXX volume in the UK and the discontinued China business.

"Australian beer volumes were marginally ahead of the same quarter last year, but on a year to date basis were slightly lower, reflecting lower overall market volume decline," the company said.

"The impact of the lower year to date volume was offset by the value benefits of continued growth in premium brands and improved pricing.

Lion Nathan said the Australia business would also benefit from a price increase, effective on August 1.

New Zealand beer volumes for the quarter were ahead of the same period last year but were down by five per cent in the year to date.

"This is attributable to continued weakness in on-premise trading, which is adversely impacted by legislative changes and a very competitive pricing environment for packaged beer," Lion Nathan said.

Due to these factors, full year earnings before interest, tax and amortisation (EBITA) from operations in the New Zealand business is expected to be in a range of $75 million to $80 million, 12 to 18 per cent below the prior year.

Wine volumes were stable on a year to date basis, with strong demand for Wither Hills and growth in the New Zealand wine distribution business offset by a decline in Australian wine volumes.

- AAP