Australia & New Zealand: Lion Nathan expects growth in Australia beer business, NZ flat

Lion Nathan Ltd., Australia's second-largest beer maker, communicated on December 15 that the company expects earnings growth from its beer business in Australian this financial year. However, New Zealand earnings would be flat, Lion Nathan revealed. Chief Executive Rob Murray told the annual meeting that fiscal 2006 would see a focus on spending on key national beer brands in Australia and in New Zealand, where it is moving to halt a slide in earnings.

Last month Lion Nathan said it expected underlying earnings growth of about 5 % in the short term, before a return to higher rates of growth in the medium term.

Lion Nathan plans to enter the dark spirit, ready-to-drink (RTD) market in Australia, where bourbon, rum and whisky-based drinks are among the most popular retail liquor types. Murray said the spirits plan and a A$420 million ($315 million) takeover bid for unlisted Coopers Brewery Ltd. would keep further capital management initiatives off the agenda in the short term. "As we go through the year, if nothing comes of the Coopers takeover, and our RTD entry is not capital intensive, then there is scope for us to revisit this area," he said.

The bid for Coopers was derailed on Wednesday when Coopers shareholders voted to strip Lion Nathan of its pre-emptive rights, effectively blocking it from buying any shares. Murray said there were processes underway, mostly legal actions, which could open the way for the takeover to go ahead. Its offer remains open until Jan. 20.

"All of those things will play out over the next few months," he said. "I think the main thing to focus on is that this is one of series of possible options for us in terms of building our business in premium beer."

About Lion Nathan:
Lion Nathan is an Australian based alcoholic beverages company with operations primarily in Australia and New Zealand. Its portfolio of beer brands includes Tooheys, XXXX, Hahn, West End, Emu, Swan, James Squire, Lion, Speights and Steinlager. It brews and distributes around 900 million litres of beer annually. Lion Nathan also has a global premium wine business formed through the combination of leading Australian and New Zealand fine wine producers Petaluma, Banksia and Wither Hills. The Lion Nathan Wines and Spirits Group produce some of Australasia’s finest wines from its wineries in South Australia (Adelaide Hills, Clare Valley, McLaren Vale and the Barossa Vallley), Victoria (Central Victoria and the Mornington Peninsula), Pemberton in Western Australia and Marlborough in New Zealand. It also owns the Argyle Winery in the United States. With its federation model of wineries producing an outstanding selection of fine wines and a focus on optimising the route to market, Lion Nathan’s Wine Group has established an industry leadership position amongst premium on-premise customers. In addition to its beer and wine businesses, Lion Nathan is involved in a number of related businesses in Australia and New Zealand. These include the distribution of licensed wine and spirits brands, the production and distribution of Ready-to-Drink beverages (RTDs), liquor retailing and malt extraction for home brewing and the food industry.

Shares in Lion Nathan, 46 % owned by Japan's Kirin Brewery Co 2503.T, eased 0.4 % to A$7.31 on December 15 afternoon in a wider market up 0.2 %.

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