Lion Nathan Reaffirms Its Annual Profits Forecast

Submitted by Craig Strzelecki on 25 July, 2008 - 08:46

Australia's second largest beer manufacturer, Lion Nathan (LNN), reaffirmed its annual profits forecast on escalating sales of its beers including XXXX Gold and Tooheys Extra Dry. Chief Executive Officer, Rob Murray's efforts have finally started to pay off in three years. For past three years, he had posted little or no profits at all since past three years and pushed all money towards advertising, marketing and promotion of its brands. The efforts have finally started to pay off as Lion Nathan has started gaining some market share from its arch-rival, Foster's (FGL).

It reported 7 percent growth in revenue for three quarters to June against its earlier reporting of 7.9 percent growth in half-year to March. It also reported an increase in its market share against its competitor, Foster's. Nathan's beer volume grew 3.7 percent to 550 million litres for three quarters when the market reflected a 1.3 percent drop in overall market volume.

Nathan's popular brands like XXXX Gold and Toohey's Extra Dry brand continued to do well in the market while its new brands Hahn Super Dry and Barefoot Radler "resonated with consumers and are building momentum."

Lion Nathan's wine volumes continued to reflect a healthy growth of 6.8 percent. However, Nathan warned that a fall in consumer spending may harm future sales of its wine product which were faring favourably as compared to wine brands from Fosters. The company projected to achieve $265 to $275 million growth in net profit when its year ended in September. However, the company's costs are expected to grow from $30 million to $36 million which is in line with company's previous guidance.

The company also reaffirmed its capability to step up its earnings in 2009 as the company had been able to grow in volume and revenue even in serious global scenario with declining economies and ongoing credit crunch.

Lion Nathan shares rose 6 cents to close at A$8.90 at Sydney trading paring its decline to 7.4 percent. On the other hand, Nathan's competitor, Foster's share prices has slumped nearly 24 percent in 2008. Japan's largest brewing company, Kirin Holdings Co, holds 46 percent shares of Lion Nathan in Australia.