Lion's video screens out Kiwis

By DITA DE BONI

New Zealand shareholders were seen but not heard at Lion Nathan's annual meeting yesterday.

After moving its headquarters across the Tasman in June, the brewer yesterday transmitted its first meeting as an Australian company from Sydney as a videocast.

The change meant about 100 Kiwis present in Auckland were unable to ask questions or vote on resolutions.

The Sydney meeting of shareholders was smaller, "only just" meeting a quorum, the company secretary said.

The Sydney gathering was so small that chief executive Gordon Cairns thanked his family and friends for coming and "raising attendance by 100 per cent."

The others attending represented mostly institutional investors. Institutions now hold about 40 per cent of the company's capital. Smaller shareholders, mainly in New Zealand, hold about 10 per cent. Lion now does more than 80 per cent of its business in Australia.

Chairman Douglas Myers addressed the meeting first, appearing eerily digitised on the video screen as he reviewed the brewer's "good year."

"Not only is our core Australasian brewing business growing profitably, but we have in place a number of strategic initiatives, which are already delivering a return for shareholders," he said.

"In fact, for the 12 months to yesterday, our total return to shareholders in Australian dollars was 24 per cent, compared with the overall market return of 4 per cent."

Mr Myers and Mr Cairns admitted the performance of Lion's brewery in China had been disappointing, and said losses there of $A27.6 million ($34.9 million) in the 13 months to September were "unacceptable."

Mr Cairns said the overall Chinese beer market, valued at less than $US100 million ($233 million), remained "relatively unprofitable."

More than 500 brewers supply the market and Lion uses less than half its brewing capacity there.

"To break even in cash terms we'd have to more than double volume or value," Mr Cairns said.

"Our competitors, either rich multinationals like Anheuser-Busch, or Government-sponsored Chinese brewers, have deep pockets.

"Without an internationally recognised brand, we have no competitive advantage. In short, we can make money, but not soon."

He did not elaborate on the company's options in China, but said it was looking for a partner there.

He said the purchase of a 28 per cent holding in Montana was a "no regrets" first move by Lion's board.



The company has made $87 million so far from its investment in the wine producer. It paid $2.30 a share when it bought a 19.9 per cent stake in May. Montana shares closed 6c down at $3.85 yesterday.

"We remain comfortable with market expectations for our earnings outcome in 2001," Mr Cairns said.

"It's been another year of solid, consistent, profitable growth ... and our outlook is positive and upbeat for Lion Nathan, particularly for the next 12 months."

Lion Nathan shares closed down 5c at $5.25 yesterday.