Very challenging" trading for S&N
The current bad weather and other localised factors means Scottish & Newcastle (S&N) is uncertain of achieving this year's trading targets in the UK and some of its other Western European markets.
Announcing its results for the six months to June 30 2007, the brewing giant said it had made "good progress" during the first five months of the year in its key Western European markets, but this had been undermined by the severe weather conditions experienced in June.
The continuation into July of exceptionally adverse weather, in the UK and France in particular, will make the achievement of this year's trading targets "very challenging", it added.
"Those weather conditions continued into July, further impacting trading in these key markets. In addition, the effect of the brewery strike in France has also impacted performance in July."
The group's UK business "continued to outperform the competition in the first half of the year, though the market has been adversely affected by poor summer weather and comparison with strong June volumes during the World Cup in 2006". S&N said its beer and cider business has outperformed in a market down by 2.8%.
"Supported by premium innovation, our branded cider revenue increased by 24.7% in the first half." Adjusted UK turnover rose 0.4 per cent to £855m, with operating profit down 13.6 per cent at £76m.
S&N's East European joint venture with Carlsberg, Baltic Beverage Holdings, saw sales up 47 per cent to £302m, with operating profits up 63.3 per cent to £60m.
"Our Russian business continued to grow very strongly for the half year. We are now forecasting beer market growth for 2007 in the range of 11 per cent to 13 per cent for the whole of 2007 and we believe that we will maintain a positive share trend.
The group said that while it remained confident going forward, "the aggregate effect of the factors described will make the achievement of this year's trading targets very challenging".
Overall turnover rose a comparable 7.8 per cent to £2.1bn, with adjusted pre-tax profits up 5.5 per cent at £191m.
