S&N cheers City on profit targets

PUBS and brewing group Scottish & Newcastle is seeking to reassure the City on its full-year targets, saying it was recovering from the downturn that hurt its business, particularly in London, in the weeks after 11 September.

The Edinburgh-based firm, emerging from a dramatic revamp, posted pre-tax profits of £243m for the six months ended October, up £2m on the year-earlier period, before one-off costs. That was in the middle of market forecasts.

'Given that we have faced not the easiest of trading conditions, this is a strong performance. More importantly they are indicative of the inherent strength of the reshaped group,' said chairman Brian Stewart. S&N has sold several pubs as well as holiday villages Pontin's and Centre Parcs. It is now focusing on big brand lagers and bitters such as Beck's, Kronenbourg and John Smith's.

Sales in the UK beer division slipped from £1bn to £990.5m, although operating profits were up 5.2% at £108m. Sales for its retained pubs rose 7.5% to £484.2m, while operating profits rose 7.3% to £106.2m.

Like-for-like pub sales were up 1.9%. Sales had been stronger in the first quarter but had been hit by a 'marked slowdown' at the London pubs after the terrorist attacks on the US in September.

Stewart said the group was already seeing a reverse in this trend and was confident for the crucial Christmas period. 'The short-term downturn experienced in September and October is easing and there is every reason to believe that the company can meet market expectations for the year.'

Analysts have pencilled in final pre-tax profits for the year to 29 April of £442m, from last year's full-year pre-tax loss of £272.1m.