C&C predicts 4% increase in six month turnover for Bulmer’s

THE makers of Bulmers cider are forecasting a 4% increase in turnover in the six months to August 31.

C&C said in a in a trading statement yesterday that margins on a constant currency basis would be largely unchanged.

For the comparative six months last year it generated sales of €363.9 million for the six months to August 31, 2003, operating profit of €62.9m and an operating margin of 17.3%.

“Performance in each of the group’s three divisions: alcohol, international spirit and liqueurs, and soft drinks and snacks, was broadly in line with C&C’s expectations,” it said in the trading update.

In an assessment brokers Solomon Smith Barney said the trading statement was better than expected. It is sticking with its positive view of the stock and has put a price of €2.87 on the shares going forward. Currently it is trading at or around €2.56.

It says cider sales overall for the year will be lower than the group’s 4% boost in the first half year. However, they will be higher than the broker’s own forecast suggesting a dip of 1% in volume growth for the full year.

Most of the first half gain is due to pre-buying in anticipation of a price hike. For the year cider volumes will be up 2%, the brokers suggest.

C&C management, which finally managed to float the company at a much lower price than initially attempted, has expressed satisfaction with the out-turn for the first half year, given the blanket smoking ban now in place.

This was introduced in March and it covers all pubs, bars, restaurants and workplaces. Some pub owners said they have seen a drop in business as a result, but the brokers believe the ban has not been the heavy hammer blow the sector generally has been claiming. Turnover for the period, up by 4%, compares more than favourably with the much more modest 1.7% estimate from Solomon.

Extrapolating the first half performance to the full year would imply a 2.4% boost in Solomon’s EBITDA estimate from e113m to nearer e116m. But the brokers doubt this will be delivered on in the current climate and it is forecasting an EBITDA rise of just 1% for the year as a whole.

Cider sales in the first half were artificially boosted and is expecting flat sales in the second period of the year for the group.

The impact of the smoking ban has also had an impact with volumes of alcohol consumption down about 5% against the brokers own estimate of 8%.