Directors refuse to resign over trading error

TOP management at C&C will not resign after bungling last week’s trading statement to the markets. Reaction yesterday was swift as the shares fell sharply, while analysts have been highly critical.

Citigroup said:“ Investors are likely to regard it as a significant oversight on management’s part that the error was not caught prior to release and/or on the subsequent investor call.”

Relative to last week’s trading statement, the projected EBIT target, against an 8% point reduction in revenue growth, implies somewhat lower quality EBIT (ie less revenue/more margin), according to Citigroup.

“We view this as an unhelpful event for the new management team as they seek to build credibility,” said Citigroup.

NCB Stockbrokers said the update “will put a question mark over management’s credibility as they continue to try and re-establish the Bulmers and Magners brands”.

In a report Reuters quoted a Dublin dealer who said: “It’s not good. A lot of the buying over the last two months has been on the back of the management and their reputation but this is the first screw up by them.”

A separate statement by the group put the mistake down to “human error”.

“The company made a straightforward error in reporting lines which, when it was picked up, was reported to the market as soon as possible.”

It said the profit guidance behind the trading update remained unchanged. The group expects to report an operating profit outcome for FY 2010 at the top end of its previously stated range of €77m-€82m, it said.

A company spokesman said it was important the market realised that its earnings guidance has remained unchanged.

One top executive said the trading statement error meant management could not be trusted.

“If they can’t get the basic arithmetic right how can they be trusted with anything else? It’s a resigning matter,” he said.