There is a sense the group is turning the corner, but investors will need to see more proof from Kronenbourg to give them the benefit of the doubt.

Ian Shackleton Credit Suisse First Boston

Pre-tax profits before exceptional items linked to the restructuring and its disposal programme rose 4.6% to �427.5m.

But �683m in exceptional charges and writedowns pulled the company �255.5m into the red.

The owner of beer brands such as John Smith's, Kronenbourg, Miller, Beck's and Foster's recently said it would focus on beer and large managed pubs in the future.

"There is a sense the group is turning the corner, but investors will need to see more proof from Kronenbourg to give them the benefit of the doubt," said Credit Suisse First Boston drinks industry analyst Ian Shackleton.

In the past year, S&N has sold its Center Parcs and Pontin's holiday businesses, as well as hundreds of small pubs.

Profitable pubs

Some analysts would like to see the company pull out of pubs altogether to focus on beer alone.

"There is some caution surrounding the group, on whether it pursues a focused beer approach to mirror its European brewing rivals or stays with its pubs. We would hope it will eventually sell its pubs to focus on brewing," said one fund manager.

But the company said sales in the pubs that remain in the group rose sharply during May and June.

And group chairman Brian Stewart said the pubs complemented the group's beer interests.

Buoyant beer

The UK beer side enjoyed a buoyant second half with profits up 6.5%.

The number of pints sold was only down 0.6% in a market that had fallen 2.6% overall due to poor weather and the foot-and-mouth outbreak, Mr Stewart said.

S&N has a 28% market share in the UK beer market.

Healthy share price

But Kronenbourg, which was bought last summer, suffered from a weak French beer market where sales fell 1%.

S&N shares slipped to 545p by 0830, a 0.55% fall. But the share price is still sharply up from its low of 341p in February last year.

Stuart Price at WestLB Panmure said the stock is now overvalued and insisted a fair price would be 491p.

Shares in Scottish and Newcastle were off 0.55 percent or three pence at 545.5p by 0830 GMT.