Lion Nathan, the Australasian-based brewer, said today that its earnings so far this year were broadly in line with expectations and ahead of last year. However, chief executive Gordon Cairns also said that the company was in talks with six companies in an effort to drag its operations in China into profit. "Earnings are broadly in line with plan and up on a year ago," Cairns said at the annual general meeting today. He said that although the beer market had declined 1.3% in New Zealand this was an improvement on the decline in previous years, while the company's share of the New Zealand and Australian markets was "in good shape".

"And we remain comfortable with market expectations for our earnings outcome in 2001," he added.

But operations in China continue to cause a headache for the brewer. "We don't have the business up for sale," Cairns said but, "We are looking for partners to help fund the cost of business in China."

Cairns confirmed the company was in talks with two Chinese brewers, two Hong Kong-listed investment companies and two other off-shore interests. He continued that the company was unlikely to invest additional funds after taking A$120 million off the value of its Suzhou and 80%-owned Wuxi assets in November.

Cairns said: "In short we can still make money in China, but not soon."

However after a list of problems for other brewers in the China including Foster's and Becks, both of which had to reassess their positions there, some analysts believe Lion Nathan would be better off to exit the market.

Analysts have been reported as saying that Lion Nathan could book a minimum A$16m loss from China in the 13 month period ending 30 September 2001. They said that the problem with a tie-up with another company was that there were already some 500 brewing companies in China.