SCOTTISH & Newcastle said "phenomenal" sales of Foster's lager and Strongbow cider in the UK boosted annual profits by nearly ten per cent last year.

John Smith's bitter and Kronenbourg 1664 lager also performed well as the UK's largest brewer raised pre-tax profits from £358m in 2004 to £392m in the face of a shrinking beer market.

The company, which runs the Federation Brewery, in Gateshead, where it makes Newcastle Brown Ale, forecast continued growth this year thanks to the football World Cup in Germany, although it warned its operations were not immune to higher energy costs.

It also warned that the unusually cold winter in Russia had hit sales at Baltic Beverages Holding (BBH), its joint venture with Carlsberg.

S&N said the UK performance was the major highlight of the year after sales and profits fell in Europe, particularly in France and Finland. Meanwhile, BBH saw its market share expand 2.1 per cent to 36.3 per cent in Russia.

S&N said trading so far this year was "in line with recent trends" with the exception of Russia, where sales were lower because of the icy winter.

The company said it would continue to focus on cost savings and producing new beers. It recently introduced Strongbow Sirrus, Kronenbourg Blanc and Foster's Super Chilled, and said such innovation was vital, particularly with the introduction of a smoking ban in England and Wales.

Mr Froggatt said: ''We've got the Irish experience to look at. Since the smoking ban was introduced in Ireland, our business Beamish & Crawford has actually grown in sales dramatically.

''We have been able to introduce new brands and new ideas which would appeal to non-smokers coming into that market. We've seen in Ireland that when you get new customers coming into pubs they are looking at different kinds of new brands and that is something we are very good at.''

Chairman Sir Brian Stewart said S&N had hit its targets in 2005.