Cider juices up C&C profits

DRINKS and snack food group C&C says its Bulmers and Magners cider brands will be the main drivers of profit growth.

C&C chief executive Maurice Pratt said with alcohol sales in pubs declining by about 3% last year because of the smoking ban, the company was looking to the English market for growth.

"Magners has had a buoyant start to the year in Scotland. We are only in our second year in this market and we are already profitable. So built on this success and following the same formula that worked so well for us in Northern Ireland and Scotland, we launched it in the south-east of England and the London market," Mr Pratt added. The company yesterday reported a 3.5% rise in operating profits for the year to February 28 to €115 million.

Turnover was up by just over 4% to €750 million with the increase coming from its alcohol division.

Cider sales grew by 9.8% to €212.6m, thanks to a 61% increase in the volumes of Magners sold. Operating profit on cider sales was up 12% to €66.4m.

The company's spirits division, which includes Tullamore Dew whiskey and Carolan's Irish cream, had a 4.7% rise in turnover to €68.5m, with operating profits of €17.6m. Volumes were 7% ahead, with strong sales of Tullamore in Germany and the Scandinavian countries. However, sales and profits at the snack food and soft drinks division took a heavy fall during the year. Sales of the company's soft drinks, which include Pepsi and Club, and Tayto crisps fell 1.3% to €238.7m, with profit down even more from €27.5m to €25.1m.

The company said much of the decline was due to a switch away from soft drinks to fruit juices and energy drinks. C&C has attempted to address the fall by developing its own range of sports and energy drinks, and sales of the product, called Energise, were going well, said Mr Pratt.

The wine, beer and spirits distribution division saw turnover rise by 5.2% to €230.6m, but profits fall 20% to €6m, with part of the decline due to the smoking ban. The company said it was too early to say how the takeover of Allied Domecq would impact the company.

C&C not only distributes Allied's brand in Ireland but has a reciprocal agreement whereby Allied acts as international distributor.

Allied has agreed to an €11bn takeover by Pernod Ricard and Fortune Brands.

Mr Pratt said there was no shortage of distributors for C&C products, and that it may not lose out on the Allied contract in Ireland.

"Over the years we have had many unsolicited approaches from others saying that when the international distribution contract is coming up for renewal could they pitch for it. It is quite possible that the distribution arrangement in Ireland may not change."

Shareholders will get a total dividend for the year of 13 cent, which will be paid out of earnings per share of 26.4c.