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Last Updated: Tuesday, 7 August 2007, 16:19 GMT 17:19 UK
Rain dampens brewer's beer sales
Bottles of S&N's Newcastle Brown Ale
S&N said UK beer sales would fall in the second half of the year
Scottish & Newcastle (S&N) has warned investors about its earnings growth, blaming severe weather conditions in the UK and industrial action in France.

The brewer, which makes Kronenbourg, Newcastle Brown, and Foster's, said pre-tax profits rose 5.5% to 191m in the first six months of this year.

Sales rose 7.8% to 2.1bn, though the firm warned that meeting its full-year earnings targets would be challenging.

It added that England's ban on smoking would also hurt its sales.

"We now believe the overall impact for the second half will be a (UK) beer market down around 1-2% and slower-than-expected growth in the more seasonally sensitive cider market," S&N said.

Broader market

S&N explained that it had "made good progress during the first five months of the year in our key Western European markets but this was undermined by the severe weather conditions experienced in June".

The group's move into growing emerging markets is alleviating much of the pain
Keith Bowman, Hargreaves Lansdown Stockbrokers

The company's shares were up 2.27% to 585p in London following the announcement.

However, S&N said that it had seen sales increase in east European and former Soviet Union markets

In the region, S&N operates the Baltic Beverages Holding (BBH), which it owns with Carlsberg.

According to S&N, revenues at BBH rose by more than 47% and operating profit climbed by 63%.

"The group's move into growing emerging markets is alleviating much of the pain being experienced throughout developed markets," said Keith Bowman, an analyst at Hargreaves Lansdown Stockbrokers.

"On balance, whilst today's results leave investors requiring greater faith over the second half, they do also reaffirm that the policy of broadening geographical diversification is the right one," he concluded.

The results came as workers at the group's brewery in Reading, Berkshire, voted to take industrial action in a row over pay.

Unite union said members were unhappy at plans to cut a link between basic pay and overtime and other enhanced rates.




SEE ALSO
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08 Aug 06 |  Business

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