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December 2, 2003

UK: S&N first half jumps 8%

Scottish & Newcastle, the UK’s leading brewer has reported a jump in half-year pre-tax profits of 8%, to £316m (US$544.7m).

Scottish & Newcastle, the UK’s leading brewer has reported a jump in half-year pre-tax profits of 8%, to £316m (US$544.7m).

Turnover was up 17% to £3,034m on beer volumes that increased 4% to 25m hectolitres.

Chairman, Sir Brian Stewart said: “These results demonstrate the successful international development of S&N. The sale of the UK Managed Retail business has created a focused, and well balanced group with the operational skills, strong market positions, excellent brands, and financial flexibility to develop as one of Europe’s leading brewers.”

Chief Executive, Tony Froggatt said: “S&N has produced a strong performance in the last six months with organic volume growth of over 4%. The growth was led by Foster’s which increased volumes by 9%, Newcastle Brown up 12% and Kronenbourg, with a firm pricing policy in its two major markets France and the UK, which grew by 6%. Foster’s and Kronenbourg are brands with proven international pedigree and the plan to brew and sell them in Russia is an exciting development for the brands and BBH. “

He continued: “The priority for S&N is to build on its strong market positions and excellent brands to deliver increased returns to grow shareholder value. We will do this by focusing more closely on the customer and consumer in all our markets, and by releasing resources from within the existing business to invest in our brands.”

Among its main markets, the UK beer market grew by around 1.5% during the period but Scottish Courage’s volumes fell by 1% overall. Scottish Courage’s top four brands (Foster’s, Kronenbourg 1664, John Smith’s, and Strongbow) outperformed the wider portfolio and grew volumes by 4%, led by Foster’s, which grew by 8%, and Strongbow which grew by 10%. These brands contribute over 75% of Scottish Courage’s branded beer and cider volume.

The French beer market grew by 9% during the period, significantly boosted by an outstanding summer, following a decline of 6.5% in the comparable period in 2002. Brasseries Kronenbourg’s volumes grew by 6% in the same period.  Amongst the key brands, Kronenbourg 1664 grew volumes by 11%, Grimbergen by 14%, Foster’s by 9%, and the mainstream Kronenbourg brand by 8%.

In Russia, market volume growth has recovered strongly following a decline of 6% in the first quarter of 2003. In the six months to October, Russian market volumes grew by 9.5%. BBH, its joint venture with Carlsberg, grew share with its volumes increasing over 12%. S&N said to further strengthen BBH’s portfolio, Foster’s and Kronenbourg 1664 will be brewed and distributed through the BBH network in 2004.

Looking forward the company said its anticipated performance for the eight months to December 2003 is in line with market expectations. In a statement S&N said it anticipates reasonable market conditions, “although consumer confidence remains fragile, and the summer season in Western Europe is unlikely to be as buoyant as in 2003.”

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