Wine big part of Lion's future

By SIMON HENDERY

Lion Nathan has reported a better-than-expected annual profit of $A152 million ($189 million) and says wine production will be a substantial part of its business within five years.

With beer consumption dropping, the transtasman brewer, which also has interests in China, has been trying this year to get a foothold in the wine business.

Its tussle with UK liquor giant Allied Domecq for Montana Wines was unsuccessful but netted Sydney-based Lion a $A64.9 million after-tax profit.

Lion now has takeover bids in play for two premium Australian winemakers, Petaluma and Banksia.

Rejecting analysts' concerns, chief executive Gordon Cairns said that in terms of earnings before interest, tax, depreciation and amortisation multiples, Lion's pitch for Petaluma and Banksia was below what Allied paid for Montana, and also below other Australian winery takeover deals this year.

"We see the wine business in five years becoming a substantial part of revenue and our earnings," Mr Cairns said. "We haven't precluded ... that there may be other acquisitions."



Lion will pay an 8Ac dividend on December 13.

On the NZ market, the company's shares gained 10c shortly after yesterday's profit announcement, but fell to a close 10c down at $5.40.

* Australia's largest brewer, Foster's Group, said yesterday that it would buy back up to 50 million, or about 2.5 per cent, of its shares over the next 12 months.