Scottish & Newcastle has said that it has made "good progress" in its core markets, despite poor weather during the summer.

The UK-based company, that recently rejected a second proposed offer of GBP7.50 per share from Carlsberg and Heineken, confirmed today (20 November) that there has continued to be underlying market weakness in many of its core Western European markets, and trading conditions in France have remained challenging, both in the on and off-trade. However, these factors are either not expected to recur in 2008 or have now been resolved, S&N said.

"We anticipate an improvement in our core Western European markets in 2008 following unprecedented weather across our markets in the key trading period in 2007. While we foresee a significant rise in input costs, we expect to mitigate this through material price increases combined with cost reduction plans," a statement explained.

In particular, S&N noted that it believes there is "clear scope for volume uplift in the Russian market" for its joint venture BBH through mix and pricing improvement, as well as continued share gains.

In today's statement, S&N also detailed four initiatives to both reduce costs and strengthen future business across the UK market, where it said robust growth in the off-trade had helped to mitigate tough conditions in the on-trade during Q3.

The company's plans include a production and packaging deal with Coors, a ten-year contract with Q-Group to build a new mill increasing cider capacity, the closure of a Berkshire-based bottling plant and a joint venture with Heritage Drinks Limited in an effort to support its heritage ale and cider brands across the UK.

Cost savings linked to these changes are estimated at £20m, the company said, with reduced medium-term capital commitment of £80m, with the substantial proportion of benefits starting from 2009.

In the last couple of months, S&N added that it has gained beer share in both the off- and on-trade, and across all its leading brands in the UK. "In particular, we have record high shares on Kronenbourg Draught, John Smith's and San Miguel," the statement said.

"Year-to-date, our performance is on track to deliver a further 1% combined beer and cider share, and we have six out of the top 12 performing lager/ale/cider brands (actual value growth)."

In France, underlying conditions remained challenging in the third quarter, as a result of both unseasonably cold weather and a high level of promotional pressure, S&N said. The off-trade declined -9.2%, while the on-trade market slipped to -2% at end-September from being up +2.2% at end-June.

Both of S&N's Asian joint ventures continued to deliver strong results, the company said, with United Breweries in India outperforming the market with a growth of 11.7% for the three months to September, Chongqing in China delivered 8% sales growth for the nine month period.

Earlier this month, BBH reported that operating profit for the three months to the end of September rose by 18.2% year on year, hitting EUR232m (US$340.4m). Sales for the quarter were up by 28.3% at EUR878m.

The company added that with respect to the arbitration proceedings in relation to BBH, it believes it has a "robust case".

"The Arbitral Tribunal will decide whether Carlsberg has irreparably breached the BBH shareholders' agreement and/or circumvented the 'shotgun' provisions of the BBH shareholders' agreement so giving S&N the right to acquire Carlsberg's BBH shares", the brewer said.

S&N has said that it is "confident that these claims will be upheld" and that it will be in a position to take control of BBH and is prepared to introduce a minority partner to support its full ownership of BBH.