Lion Nathan said that after a solid start to the year, its Australian and New Zealand beer business experienced challenging trading conditions at the end of the first quarter, which continued into January, and beer volumes fell compared to the same period last year.
Lion Nathan's beer brands include Tooheys, Hahn, XXXX, Swan, Beck's and Steinlager.
"The performance of our Australian and New Zealand beer business, particularly since the end of December, has been disappointing," Lion Nathan chief executive officer Rob Murray said.
"At this early stage of the year it is not easy to forecast what impact this will have on our full year result, but we would expect that net profit after tax (from operations) for the 2005 fiscal year will be within the $230 million to $235 million guidance already provided to the market."
Murray said this was prior to the impact of a one-off provision of about $5 million for raw materials, inventory and other associated costs in the company's Australian RTD (ready-to-drink) contract packing business as a result of a product recall initiated by the distributer in Japan at the end of the 2004 calendar year.
The charge would be taken in the first half but could be reduced by recoveries from third parties.
Lion Nathan said that beer volumes in Australia in the first quarter had fallen 2.6 per cent due to competitive pricing in the alcoholic beverages sector and a softer tap beer market.
The impact of the volume decline had been partly offset by a continuing shift to higher-margin premium brands, where volumes grew, and pricing improved.
In New Zealand, beer shipments fell 4.3 per cent as a result of poor weather over the holidays and the introduction of legislation affecting on-premise trading.
"The pricing environment remained very competitive with Lion Nathan bringing its pricing down in December to meet the market," the company said.
"Demand for higher-margin premium products remained strong."
Lion Nathan said wine volumes were slightly ahead of the same period last year, driven by continued growth in demand for the Wither Hills label and increased exports from the Australian wine business, especially to the United Kingdom.
In the domestic Australian wine market margins improved.
A spokesman for Lion Nathan said its beer sales were experiencing competition from other beer brands and ready-to-drink spirits but would not identify the brands in question.
The spokesman said it was too early to tell for how long the company's beer brands would experience trading difficulty.