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EDITIONS
Monday, 3 February, 2003, 16:23 GMT
Consumer slowdown traps brewer
Beer
The beer division will see no profit growth this year
Shares in Scottish & Newcastle, the UK's biggest brewer, have slid by more than 8% after it warned it was being hit by the High Street downturn.

Scottish & Newcastle, the beer and pubs firm which brews Kronenbourg, Fosters and Baltika beers, said a major reorganisation of its distribution network had caused more disruption than expected.

The 15m revamp meant that the firm's UK beer division would see "no significant growth" in operating profit this year.

Scottish & Newcastle added that more difficult retail climate was putting its profits "under some additional pressure".

"The company has been affected by the well reported market weaknesses," a statement on Monday said.

Acquisition strategy

The announcement received a cool welcome in the City, where shares in the brewer slid more than 8% to 375.75p in early trade on Monday.

"It's likely there's going to be some forecast-downgrading on the back of this," said David Liston, a fund manager at Gerrard, which owns Scottish & Newcastle shares.

He added: "Incurring additional costs at a time when beer consumption is under pressure is clearly not good news."

Stuart Price, an analyst at WestLB Panmure, said the profits squeeze could scupper the brewer's expansion plans.

"They still haven't ruled themselves out of the bidding for [Austrian brewer] BBAG. But you've got to wonder how they could afford it."

Scottish & Newcastle has looked to acquisitions for much of its growth in recent years, buying France's Kronenbourg in 2000 and, last year, taking over Finland-based Hartwall in 2002 in an effort to tap into Russia's fast growing beer market.

Scottish & Newcastle shares stood 29p, or 7.1%, lower at 382p in late trade on Monday.

See also:

02 Jul 02 | Business
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14 Feb 02 | Business
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