S&N warns of falling profits

Related tags Scottish & newcastle

Scottish & Newcastle's UK profits will be severly affected by
delays to restructuring of its Scottish Courage division.

The UK's leading brewer Scottish & Newcastle said this week that profits at its UK beer operations this year will drop because of problems with restructuring at its Scottish Courage division.

The company said that the UK unit will incur costs of £15 million in the second half of the current financial year. Scottish & Newcastle has also been affected this year by market weaknesses, particularly in the high street.

In December S&N announced that the reorganisation of the Scottish Courage supply chain had caused greater than expected disruption costs and had failed to bring about the expected cost savings.

The company then brought forward the opening of the third and largest of its Regional Distribution Centres in Thatcham, Berkshire but productivity levels of the new centres are still well below expectations, according to S&N.

Despite good performances anticipated from its key brands the company said that additional costs in the supply chain are expected to impact the business for the rest of the year with no growth in operating profit during 2003.

On a more positive note, the company added that its international units, including Russia, were performing in line with expectations.

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