Guinness tops up profits by 5% to £148m million

THE long hot summer, which boosted lager sales, was responsible for the 5 per cent growth in Guinness Ireland's pre tax profits to £148 million in 1995. Sales also rose by 5 per cent to £703 million, reflecting a good performance in the Irish market and buoyant export markets.

After a sluggish first half due to the new drink driving legislation, introduced at the end of 1994, the exceptionally good weather led to a resumption of growth in the second half.

Lager volume sales in the domestic market grew by almost II per cent. The most buoyant brands were Budweiser, up 25 per cent, and Carlsberg, up 14 per cent. Harp lager sales were static after a decline was arrested in the previous year. Smithwicks, the Kilkenny brewed ale, declined.

There was a "slight decline" in volume sales of stout, according to Mr Colin Storm, managing director of Guinness Ireland. Stout as a percentage of the beer market fell from under 50 per cent to between 46 per cent and 47 per cent. However, within that market, Mr Storm, said Guinness held its market share.

Growth of stout sales resumed in the fourth quarter of 1995 and this had continued into the first quarter of this year, said Mr Storm.

While not giving any precise forecast, he said the outlook for this year was more positive than this time last year.

Exports were particularly strong and the group hoped to at least maintain 1995's profit growth, he added.

The employees will again sire in a profit sharing scheme. The payment, about £3.5 million, will be in Guinness shares. It represents a month's pay, or an average of about £2,500 per employee.

The 1.5 per cent growth in the Irish beer market in 1995 was welcomed by Mr Storm. This, he noted, contrasted well with other European markets which had to contend with a contraction, or no growth. He attributed this to the strong performance of the Irish economy and good summer weather.

Mr Storm pointed to a strategic decision to revitalise the ale/red beer sector with the introduction of the Kilkenny Irish Beer brand. This has surpassed its targets.

Exports were particularly strong and enjoyed a 16 per cent growth. Kilkenny Irish Beer and Harp lager showed "exceptional growth", especially in Germany, France and Italy, with draught shipments up 24 per cent.

There was also a high level of buoyancy in the newer European markets in eastern Europe, driven particularly by the continued development of Irish pubs under the Guinness Irish pub programme. There are now over 800 outlets, an increase of 300 during the year. Exports to the US showed a "significant increase", said Mr Storm, with shipment up 23 per cent.

The Guinness parent has warned that trading conditions will not improve strongly in the current year as it reported a sharp drop in profits for 1995.

Group pre-tax profit fell to £876 million sterling from £915 million in 1994, although the latest figures were marred by £64 million in reorganisation costs.

Total dividends increased from 13.8p to 14.9p on a rise in earnings per share from 29.3p to 31.6p.

"Within an overall picture of modest underlying growth, 1995 saw Guinness making good progress in its key programmes," said chairman, Mr Tony Greener.

"Our leading brands, Johnnie Walker scotch whisky and Guinness stout, are continuing to grow strongly in sales, profit and market share as a result of steadily increasing investment in marketing."

Mr Greener said the group was now investing more money in marketing to promote all of its brands, but he warned "We do not expect that trading conditions will improve significantly in 1996.

"We are determined to increase prices where the strength of our brand justifies an increase to consumers. We expect 1996 to be a year of steady underlying progress in profit performance."

The summer had benefited sales of Guinness in Britain and its British Guinness brewing division had performed well with total volumes ahead by 4 per cent.