Lion Nathan today reconfirmed its full year guidance for net profit on the back of a small increase in beer sale volumes for the first nine months. The Australia-based brewer also reported that it had agreed a deal to sell its Auckland brewery with plans to build a new brewery in place.

In a trading update, Lion Nathan said that total beer volumes (excluding UK licensed and international export volumes) grew 0.8% to 657m litres for the nine months to June.

Australian year to date (YTD) volumes were up 0.6% to 531m litres, continuing the trend of growth in national brands offset by a decline in regional and value brands. Overall volume growth trends were negatively impacted in the third quarter by subdued demand, particularly in NSW, and extensive competitor activity in May and June.

Nevertheless, the Power Brand portfolio grew 3.5% in the period, with International Premium brands, Tooheys Extra Dry and XXXX Gold continuing to show good growth in spite of strong competition, while Hahn Super Dry maintained an impressive growth trend in its first year, the company said.

The overall beer market continued to grow, with MAT volumes up an estimated 0.5% to May 2007.

In New Zealand, Lion Nathan beer volumes grew by 1.9% to 126m litres year to date, primarily due to core brand growth. Premium volumes in particular were strong, driven by both international and domestic premium.

However, case volumes for the wines and spirits/RTD business were down slightly, mainly due to the loss of the Allied Domecq portfolio, offset by strong wine volume growth.

In the Lion Nathan Wine Group, which encompasses Wine Australia, Wither Hills, Argyle and the Fine Wine Partners business, volume growth was driven by core brands, particularly St Hallett, Petaluma, Stonier and Wither Hills and included strong export sales to UK/Europe during the quarter.

Lion Nathan confirmed its guidance for operating net profit after tax of A$250 - $260m for the 2007 financial year.

In New Zealand, Lion Nathan announced it has entered into an agreement to sell its current Auckland Brewery site. AMP Capital Investors has purchased the site for NZ$162m, subject to New Zealand Overseas Investment Office approval, and intends to develop the property for high-end residential, retail and office use.

The company said that NZ$50 million of the sale price will be realised in this financial year with the balance payable when Lion Nathan exits the site.

The sale arrangement means that Lion Nathan expects to continue to operate from the Newmarket site for around four years while a new facility is built.

Explaining the decision to re-locate, Lion Nathan CEO Rob Murray said: "A once in 50 year investment was needed if we were to remain at our current site. Over the years Newmarket has changed into a light commercial, retail and residential area. As a manufacturing site the property is now landlocked, making access and expansion increasingly difficult. The long-term benefits we can achieve by establishing a new facility elsewhere in Auckland are simply too positive to pass up. "

"Building a brand new manufacturing and warehousing facility in Auckland is a significant investment that positions our New Zealand business for the long-term. The new facility will allow us to better align our production and supply chain with the needs of the marketplace, further improve the environment for our people, improve customer responsiveness, optimise productivity and create new opportunities to improve our environmental performance, for instance our energy and water efficiency."

Lion Nathan confirmed that it has secured options on a number of alternative Auckland sites. But in a statement it added that as evaluations are ongoing, the Company will not elaborate on those options until a decision on a new site is made - most likely before the end of November.

A new manufacturing and warehousing facility will require land, plant and equipment expenditure of around NZ$250m, the group said.

The alternative of staying at the existing brewery would have required an investment of around $NZ50m.