S&N profits above expectations but no news on pubs

Scottish and Newcastle, which claims to be Europe's most profitable brewer announced a 3.5% rise in full year profits today of £442.3m (US$677.1m), up from £428m a year before and compared to forecasts of £431-445m.
But despite being at the top of analysts' expectations, its shares dipped due to the disappointment it made no mention of a pubs sell-off.

The brewer, which owns some 1,500 UK pubs, would only say that was continuing to look at releasing cash from its pub assets.

The stock price slipped one percent to 604 pence by 0815 GMT, having outperformed the UK stock market by 35 percent over the last 12 months, and the Dow Jones European food and drink index by 14 percent.

The market has been keen for some time that S&N focus its attentions on the brewing side of the business alone so it can compete more effectively with the likes of Heineken and Interbrew.

"The results were at the top end of expectations, but there was disappointment that there was no announcement on the future of its 1,500 pubs," said Lehman Brothers analyst Andrew Gowen.

However others were more positive. Stuart Price of WestLB Panmure said: "Overall, a solid set of results. The future of the pubs is not in doubt. Management has confirmed that it is looking to release capital from the estate. We think that this could happen before Xmas - especially given that Danone wants the final payment for the Kronenbourg business in September."

Operating profits grew in all three of it businesses - UK beer, international beer and pub retailing - with like-for-like sales in its pub estate up 1.6 percent.  And the first two months of this year had continued in the same vein with poor weather in north Europe offset by football's World Cup and in Britain by Jubilee celebrations.

Chairman Brian Stewart said the company was well positioned in Europe, the world's largest beer market, with three out of the continent's top 10 brands in Kronenbourg, Foster's and Baltika, Russia's best-selling beer.