C&C predicts further fall in its core markets

THE already downbeat business outlook at drinks group C&C got gloomier yesterday with the Dublin and Clonmel-based business saying that market conditions in its core markets of Ireland and Britain are likely to deteriorate further.

The group — which makes the twin cider brands of Bulmers and Magners — reiterated yesterday in a pre-close trading update, that results for its latest financial year up to the end of February, will show an approximate 13% decline in revenue and operating profit of around e90 million. That latter figure would be down from e125.2m in the previous year. Poor weather last summer and a strong euro against sterling were the main causes for the poor performance during the year.

C&C shares rose 10%, or 9 cents, to close at 99c in Dublin trading. The stock has fallen 32% since the start of the year, pushing its market capitalisation down to e313.

Revenue in C&C’s core cider division for last year, is expected to show a decline of 17% — representing a 14% fall for Bulmers in Ireland and a 23% sales decline for Magners in Britain.

“Forecasting consumer behaviour in the current trading environment is very difficult. Market conditions in Ireland and Britain are, if anything, getting worse and increased price sensitivity by consumers plainly presents risk to our premium brand portfolio,” the company said.

New group chief executive John Dunsmore said major progress would be made on the company’s cost competitiveness programme over the coming 12 months. This will include the rationalisation of C&C’s cider making facilities in Clonmel, where 120 redundancies were announced last month. Also included are a disposal of excess apple stock — to the cost of e11m — and a total writedown of e130m of the total value of the Clonmel operation.

“The key task is to create a sustainable and secure platform for our cider business in Ireland and Britain. This will ensure we build a strong foundation for growth in future years,” Mr Dunsmore said.

Meanwhile, the group repeated its dismissal of media speculation that it is looking to sell its spirits business which includes the Tullamore Dew and Carolan’s Irish Cream brands.