|It was more the Deluge rather than a New Ice Age during Summer 2007 in Ireland and the UK |
C&C Group plc, the Irish cider manufacturer and beverages distributor, today issued a trading statement for the six months ending 29 February 2008.
Quarter to 30 November 2007
Revenue(i) for the quarter to 30 November, 2007 declined by 15% compared with the same period last year. This performance reflects a decline of 18% for C&C’s Cider division and growth of 1% for Spirits & Liqueurs.
The year-on-year decline in the Cider division’s revenue for the third quarter is in line with the performance in the quarter to 31 August 2007 and comprises a 30% decline in UK and 2% growth in the Republic of Ireland.
The performance in UK primarily reflects the impact of a loss of on-trade market share during the period to 31 August, the negative carry-over impact of poor summer weather on recruitment to the premium cider category, and a very weak overall on-trade market.
As recent as a year ago, Magners Cider was viewed as a big success in the UK and test marketing had began in some European cities but increased competition and a bad summer has proved to have been a double whammy in the British market.
The performance of Bulmers in Ireland represents a strong recovery from the quarter to 31 August which was impacted by the poor summer weather. C&C says this performance reflects the established nature of the Bulmers brand in Ireland compared to Magners in UK.
Group operating margin(i) for the quarter was one percentage point lower than in the half year to 31 August, 2007 with Cider division margin unchanged.
C7C says that implementation of the Group’s re-organisation and cost reduction programme, announced on 15 November, 2007, is progressing in line with expectations. The Group says it continues to take a series of measures to sharpen its competitive response in UK and expects to make an announcement on the appointment to the post of Managing Director – Magners GB in the coming weeks. The benefit of these measures will be felt in 2008/9.
Trading since 30 November 2007
Trading over the Christmas period followed the pattern in the quarter to 30 November, 2007– a solid performance in Ireland and a weak performance in UK.
Accordingly the Group expects overall revenue(i) for the year to February 29, 2008 to decline by approximately ten percent compared to the 2006/7 fiscal year and operating profit margin(i) to be down by approximately ten percentage points.
Including income from discontinued operations and from non-recurring foreign exchange gains, this operating performance is expected to result in an earnings per share(ii) outcome for the 2007/8 full year at the lower end of the range of current market expectations.
The Group intends to commence an on-market share buyback programme shortly.
(i)Continuing operations – before exceptional items and at constant currency.
(ii) Before exceptional items.