Lion Nathan faces challenging times

MELBOURNE - Beer sales in Australia and New Zealand are suffering from price competition, a fall in demand for tap beer and poor weather, says Lion Nathan.

The transtasman brewer said yesterday that after a solid start to the year, its Australian and New Zealand beer business experienced challenging trading conditions at the end of the first quarter, which continued into January, and beer volumes fell compared with the same period last year.

Lion Nathan's brands include Tooheys, Hahn, XXXX, Swan, Beck's and Steinlager.

Lion Nathan shares fell 58Ac, or 7.1 per cent, to A$7.57 on the ASX but rose 20c, or 2.3 per cent, to $9 on the New Zealand market.

"The performance of our Australian and New Zealand beer business, particularly since the end of December, has been disappointing," said Lion Nathan chief executive Rob Murray.

"At this early stage of the year, it is not easy to forecast what impact this will have on our full-year result, but we would expect that net profit after tax [from operations] for the 2005 fiscal year will be within the A$230 million to A$235 million guidance already provided to the market."

Murray said this was before the impact of a one-off provision of about A$5 million for raw materials, inventory and other associated costs in the company's Australian RTD (ready-to-drink) contract packing business as a result of a product recall initiated by the distributor in Japan at the end of last year. 

Lion Nathan said beer volumes in Australia in the first quarter had fallen 2.6 per cent because of competitive pricing in the alcoholic beverages sector and a softer tap beer market. 

In New Zealand, beer shipments fell 4.3 per cent as a result of poor weather over the holidays and the introduction of legislation affecting on-premise trading.

A spokesman for Lion Nathan said its beer sales were experiencing competition from other brands and ready-to-drink spirits, but he would not identify the brands in question.

The spokesman said it was too early to tell for how long the company's beer brands would experience trading difficulty.

- AAP