Scottish & Newcastle's beer prices set to rocket
In its last results presentation as an independent company, brewer Scottish & Newcastle (S&N) has reported flat profits and warned of "substantial" price increases for its products this year.
The Edinburgh-headquarted group, currently the subject of a recommended bid from Carlsberg and Heineken, saw overall turnover rise 7.9 per cent to £4.15bn in the year to December 31.
Operating profits grew by 5.7 per cent to £560m, although the group said pre-tax profits remained "level" at £444m. Due to the Carlsberg/Heineken bid, S&N said it was not planning to pay a dividend.
S&N meanwhile warned of price increases for its products in the coming months.
"While we foresee a rise of 8.5 per cent in input costs, we expect to mitigate this through substantial price increases combined with cost reduction plans," said chief executive John Dunsmore.
Revenues in the UK were flat for the year, at £1.86bn, with operating profits down 7.8 per cent at £213m. S&N said its branded beer and cider volumes rose 0.1 per cent against a market down two per cent.
UK margins fell to 11.4 per cent in 2007 from 12.4 per cent in 2006, with the blame being laid at the doors of the smoking ban, higher input costs and lower-than-expected volumes over the key summer trading period.
Meanwhile volume growth in S&N's international markets grew substantially: Russia up 19 per cent, Ukraine up 39 per cent, Kazakhstan up 46 per cent and India up 14 per cent.
Speaking at his first - and last - annual results briefing, Dunsmore said: "In the face of substantial challenges in terms of unprecedented bad summer weather, the UK smoking ban and the distraction of the consortium approach, it is very encouraging that S&N's outstanding portfolio of brands and leading market positions has still delivered revenue growth of 7.9 per cent and operating profit growth of 5.7 per cent.
"It is this powerful portfolio that has driven the Heineken/Carlsberg consortium to make the 800p per share offer that the Board is recommending."
