UK: S&N unveils cost cuts despite profit jump
Scottish & Newcastle has unveiled plans for a swathe of cost cuts despite seeing earnings jump 10% last year.
The UK's largest brewer said today (20 February) that it will look to extract GBP50m (US$97.4m) in cost savings from the business over the next three years.
The cost cuts come as S&N posted a 7% rise in revenue for the year to 31 December. Operating profit, meanwhile, reached GBP535m, an increase of 10.1%.
Chief executive Tony Froggatt said: "(The cost cuts) will be achieved by maximising efficiencies across production and distribution facilities and through streamlining our back office activities." Further details were not disclosed.
Looing at its results from 2006, S&N said branded sales across the group rose 8.9%. In the UK, S&N said it increased its market share, but warned that the introduction of a smoking ban in the country this year will hit its profits by around GBP10m.
S&N's international division, including operations in Portugal, France and Finland, delivered growth for the company's key brands, although operating profit slid by 1.1% to GBP178m. Sales in France, meanwhile, were hit to the tune of GBP10m following disruption caused by the introduction of a new on-trade sales team.
In Asia, S&N confirmed reports that it will enter Vietnam through a joint venture with the state-owned Vinataba group. Further details were not revealed.
Meanwhile, S&N toasted strong margin growth in India, through its United Breweries joint venture. Moreover, S&N said its Chongqing brewery in China gives the brewer "a strong regional platform for regional growth".
Finally, S&N's joint venture with Carlsberg in Eastern Europe, Baltic Beverages Holding, saw sales leap by 23% year-on-year to GBP724m, while operating profit soared by 42.9% to GBP160m. Last year also saw the completion of BBH's merger of its four Russian businesses.
A final dividend of GBP0.14 per share will be paid on 2 May to shareholders of register on 30 March.
Sectors: Beer & cider
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