SPECULATION that Scottish & Newcastle could be a takeover target intensified last night after results from the companies international division failed to impress the City.

The UK's biggest brewer unveiled strong half-yearly figures with an eight per cent rise in pre-tax profits to £158m.

But the group's international division saw operating profit rise by only four per cent.

Some analysts believe that SABMiller would consider S&N an attractive acquisition due to the potential cost savings in international operations that would result.

An industry expert told The Northern Echo: "While it is good to see some growth, four per cent is hardly spectacular.

"It is possible that bid rumours may reappear, given the likelihood that costs could no doubt be substantially trimmed by a purchaser."

Figures revealed by S&N for the UK showed a strong turnaround from last year, with total volumes of its four key brands - Foster's, Kronenbourg 1664, John Smith's and Strongbow - rising by nine per cent.

Operating profits in the division were up 19 per cent on a comparable basis to £63m and the group said it expected annual UK operating profits to be slightly ahead of last year.

It said the division saw significant improvements in operational efficiency, including savings from the group's acquisition and successful integration of Hereford cider maker Bulmer's.

Tony Froggatt, chief executive, said: "The good performance in the first half of 2004 gives us confidence that we will meet our financial and commercial objectives for the full year."

S&N said the results had been adjusted to account for a change in the company's financial year from April to December last year and were affected by the sale of its pubs estate.

Earlier this year, S&N announced the closure of its Fountainbridge and Tyne breweries, in Edinburgh and Newcastle, with the loss of nearly 300 jobs. The group said that it was on target to achieve £60m of cost savings by 2006, up from £45m.

S&N declined to say where the extra savings would come from, but said they would not necessarily involve further closures or job cuts.

William Maydon, fund manager at stockbroker Wise Speke, said: "These solid results confirm that Tony Froggatt's strategy continues to bear fruit.