Lion Nathan profit surges 13%, operational review underway

Posted by Daniel Palmer on 5th November 2009

Lion Nathan, Australia’s second largest brewer, has delivered a 13 per cent increase in net profit after tax on the back of a 7.1 per cent rise in sales.

The maker of Tooheys and XXXX, which was recently acquired by Kirin Holdings, said the result was a sign of the success of the strategy implemented five years ago.

“Five years ago we decided to invest in our most valuable assets; our brands, our people and our breweries and we made a commitment that the investment would be followed by a step-up in earnings,” Chief Executive Rob Murray said. “I am delighted we have delivered on our promise. Our people have delivered a quiet revolution in our business model and created a company acutely focussed on the needs of customers and consumers.”

“Our shareholders have benefitted by receiving a price for their shares that rightly reflects the high quality business that we have built.”

The result was led by their Australian beer division, where volumes were up 4.7% and revenue 11%, and they advised that they were now the owners of three of the top five selling beers in the country. Premiumisation was still a dominant trend, they added.

Lion’s wine and New Zealand beer divisions were comparative laggards, with the New Zealand marketplace harder hit by the economic crisis and wine businesses struggling around the world.

The company also took the opportunity to provide an update on their integration with National Foods. The new business owned by Kirin is named Lion Nathan National Foods, with an operational review underway to determine a new strategy for the combined group.

“While I don’t intend to pre-judge the outcome of the operational review, we have previously made it clear that these are two quite different businesses and we’re not about to integrate operations for the sake of it,” Mr Murray advised. “It’s very early days and both Andrew Reeves and I are keen to learn from the National Foods people before we make any judgments on how the business should move forward.”