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Lion Nathan on track to meet profit forecast; NZ clears way for Kirin takeover

Thursday 16th July 2009

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Lion Nathan Ltd., Australia’s second-largest brewer, has announced it’s on track to deliver its target profit this year as Australians continue to drink increasing volumes of beer in the face of the global slump.

The Australasian brewer facing a takeover by major shareholder Kirin Holdings said it expects to deliver a full-year profit of between A$305 million and A$315 million. The company increased its Australian beer volumes some 5% in the year to date. Separately, the Overseas Investment Office cleared Kirin to mop up the remaining 54% of the company it doesn’t already own.  

“It is particularly pleasing that we are on track for a significant profit step up in 2009, despite weaker economic conditions, volatile financial markets and an uncertain outlook for many consumers,” said chief executive Rob Murray in a statement. “The investments we have made in our business since 2004 have created a stronger and more flexible business.” 

The company boosted overall sales by 3% in the nine months ended June 30 with net sales revenue growth up 6% by strong demand in Australia. Wine sales were down an unspecified amount, and there was a decline in the volume of liquor sold in New Zealand.  

The stock rose 0.1% to A$11.67 on the Australian stock exchange, and gained 1.3% to NZ$14.58 on the NZX 50 Index.  

In April, Kirin offered to buy out the remaining shareholders in Lion, tapping strong demand for beer as sales flag in its home market of Japan.

It will gain control of brands including Steinlager, Lion Red, Speight’s, Macs, XXXX, Tooheys, Becks and Hahn beers, St Hallett and Petaluma wines and McKenna bourbon. Kirin’s expansion plans also include plans to acquire 49% of the Philippines’ San Miguel Brewery, the largest food and drinks company in South East Asia. 

More recently, Kirin has been linked to a potential merger with Suncorp Holdings, Ltd., the Japanese company that owns Frucor, which would combine the two biggest beverage companies in Japan.  

Lion’s board is supporting Kirin’s offer at A$12.22 apiece, comprising of A$11.50 cash and a fully franked special dividend from Lion of 72 cents a share.  The Australian Competition and Consumer Commission approved the takeover last week.

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