Cider sales drive C&C turnover up 9%

STRONG cider sales will boost turnover 9% in the current year drinks to snacks group C&C said yesterday.

While the group, which makes Bulmers and Magners ciders, enjoyed a good year with its cider sales in Britain in particular rising firmly, margins will stay unchanged year-on-year.

Overall, cider achieved sales growth of 30% boosted by a substantial jump in its British sales, which were up over 120%.

Shares in the group fell throughout the day and were down 3.23%, or 19cents, to €5.69 by late afternoon, losing some of Friday’s gains.

Weak sales of Carolans Irish Cream Liqueur and a “material drop in operating margins” at its soft drinks and snacks division are anticipated over the 12 months under review.

Davy Stockbrokers analyst John O’Reilly said: “Overall, cider performed better than expected but other divisions were weaker.”

The company is due to post full results for its 2005/2006 business year on May 9.

It noted that, despite significantly higher marketing costs, operating margins would be broadly unchanged before exceptional items.

That should leave earnings per share (EPS) in line with market expectations, said the statement.

C&C said its financial performance mainly reflected the net impact of continued strong growth in the cider division and a significantly reduced contribution from the soft drinks and snacks division.

Turnover growth in C&C’s cider division for 2005/7 will be about 30%. This reflects volume growth of about 6% for the group’s Irish cider brand Bulmers and volume growth of about 125% for its international cider brand Magners.

That growth was mainly in England where the brand is being rolled out in the greater London area. Strong growth in Scotland was also recorded.

Trading conditions in the soft drinks and snacks division remained difficult throughout the fiscal year and performance deteriorated during the second half.

Margins in the grocery channel contracted, which will result in a material drop in operating margins. Steps to address the performance of its soft drinks business are underway, C&C said.

On the back of its strong sales of Magners in the greater London area, the group is to expand its distribution to the big cities of England and Wales in the year ahead.

“The successful implementation of this plan and continued share growth in existing markets for the group’s cider business underpins the group’s expectation of continued operating profit growth in 2006/7,” said the company.

Its other divisions should show modest organic operating profit growth in 2006/7.

However, this will be outweighed by the effect of the loss of the distribution of Volvic and Evian and the Allied Domecq brands.