The UK brewer Scottish & Newcastle was cheered today by generally good results with comparable profits before tax up 11%.

Profit before tax for 2004 was £373m. On an reported basis this was down from last year's £471m.  The fall in profit before tax and earnings per share from 2003 to 2004 is due primarily to the sale of managed retail for £2.5bn cash which enabled the group to focus on international brewing.

Turnover reached £4,992m, up +1.7% on a comparable basis, but down in unadjusted terms from £5,512m in 2003.

Chairman, Sir Brian Stewart said: "This is a strong financial performance, with underlying operating profit up 7.1% and comparable earnings per share up 12.7%. The results demonstrate how the greater diversity of our business allows us to manage challenging conditions in local markets and still meet our financial objectives. This year we have also significantly increased investment in our brands, enhancing the prospects for volume and value growth in our markets."

Chief Executive, Tony Froggatt said: "S&N made very good progress in 2004. All our divisions produced improved operating profits, but equally importantly we enter 2005 a much more competitive business, with greater efficiency, higher investment in our brands and good momentum in our key markets."

The company said that organic growth in beer volume was 4.5%. The turnover growth of 1.7% was slightly behind volume growth due to the strong volume performance in emerging markets and the reduction in reported turnover following the 32% cut in Finnish excise duty, S&N said.

Adjusting for the impact of this duty cut, comparable turnover growth for the group was 2.9%.

Greater efficiency and a focus on our premium brands led to gross margin improvements in all divisions and, despite a 17% increase in brand investment, net margin grew by 45 basis points.

The company said the UK business performed particularly well and demonstrated a strong turnaround from 2003.  Volume in S&N's top four  brands, Foster's, Kronenbourg 1664, John Smith's and Strongbow was up 4.5%, driving operating profit growth of 11%. There were also major improvements in operational efficiency, including synergies from the successful integration of Bulmer, it said.

"Our International business also performed well despite weak economic conditions across Western Europe and a colder and wetter summer than in 2003. Our continued focus on premium brands combined with greater efficiency allowed us to grow operating profits by 1.1% in markets where volumes were generally depressed. Despite these tough conditions we have not sacrificed long-term brand building and we increased advertising spend, giving us greater competitive strength in 2005," Froggart said.

In Eastern Europe, BBH - the company's joint venture with Carlsberg - had a strong recovery in the second half and, for the year as a whole, beer volumes grew 18%. Operating profit increased by 12%.

Trading so far in 2005 was in line with recent trends in all our major markets, the company said.

"Looking forward, our UK business is well positioned to deliver top line growth driven by brand investment, innovation and distribution gains, whilst continuing to deliver significant cost savings," a statement said.

The company said that in Western Europe, and France in particular, beer markets are likely to benefit from easier summer comparatives although the underlying performance in 2005 will be relatively subdued as the outlook for consumer confidence remains weak.

In BBH it said it expects continued volume and sales momentum as we extend our leadership through the strength of our brands and by operating our businesses in a more integrated way.