Beer and Tobacco
There is talk in the street that brewery shares have seen their best. They finished the year about 10 per cent down. The Financial Times index touched 103 in February, fell to 86 in July and has now recovered to 93. What is there to attract buyers? The output of beer was slightly down over the last twelve months, but costs have risen and it has been due only to selective price rises that profit margins have not suffered too badly. Some of the big mergers are now realising good economies. For example, ALLIED BREWERIES (Ind Coope, Tetley Walker and Ansell) was able to increase its half-year profits by 10 per cent before tax, while wtirrBREAD managed a rise of nearly 9 per cent. These two shares yield 5.1 per cent and 5.5 per cent respectively and seem rela- tively attractive. The average yield for the brewery group as a whole is 5.3 per cent. It may be that investors mill find such a yield too low for a period of uncertainty. Some holders have already been switching into tobacco shares, where the average yield is 61- per cent.
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