C&C Group plc, a manufacturer of cider for the UK and Irish markets, said in a trading statement today that revenue(i), for the six months to 31 August 2008, is expected to be down by 8% compared with the same period in 2007. The group said that the current difficult market conditions to continue throughout the second half of the year, which, notwithstanding the benefit of the roll out of draught Magners in Great Britain, will result in continued pressure on revenue and operating profit. 

Operating margin(i) is expected to increase by approximately one and a half percentage points in the same period. C&C said the operating margin increase reflects the benefits of the Group’s re-organisation and re-structuring programme which was successfully implemented as of March 2008.

The combined effect of revenue decline and margin improvement is expected to be a broadly unchanged operating profit(i) for the half year relating to the same period in 2007. 

Revenue for the Cider Division is expected to be down by approximately 11% compared with the same period last year – broadly in line with sales volume.

Bulmers cider volumes in the Republic of Ireland are expected to show a decline of approximately 11% in the in the half year. Magners volumes are expected to show a decline of approximately 15% in the period. The performance reflects a deteriorating economic environment in C&C’s principal markets and in particular the poor performance of the on-trade channel.

Spirits & Liqueurs shipments are expected to increase by 3% over the same period last year.

C&C said the group’s financial performance, for the first half, is at the lower end of the guidance given in July. The expected return to volume growth in Great Britain in Quarter 2 did not materialise due to the worsening economic environment, continuing competitive pressure and a slower realisation of the benefits from market initiatives. Performance in Ireland has, in addition to the economic environment, been affected by the cumulative impact of two consecutive poor summers on category recruitment.

(i)      Continuing operations – before exceptional items and at constant currency. The difference between actual and constant currency has a minimal impact on operating profit.