C&C cider net revenue drops 5.3%

DRINKS COMPANY C&C has reported a growth in sales volumes of its flagship Magners cider in Britain for the first time since 2007.

The group’s interim results reveal the company secured a 73 per cent increase in net revenues to €305.5 million in the six months to the end of August.

However, total volume growth of 1.6 per cent for Magners compared to a year earlier was cancelled out by declining sales of Bulmers cider in Ireland, with the result that net revenues across its original cider business fell 5.3 per cent to €144.2 million.

Operating profit for Magners and Bulmers combined fell 1.8 per cent to €47.9 million, with Bulmers’ volumes down 3.4 per cent.

C&C chief executive John Dunsmore described the Irish market as “challenging”, adding that conditions in both the key British market and Ireland were “unpredictable and very tough”.

C&C said it expected to make an operating profit of €102-€106 million for its fiscal year to the end of February 2011.

The company was cheered by the return to volume growth – “albeit modestly” at 0.7 per cent – for Magners in Britain. Sales of the cider started to decline in the UK shortly after its “Halcyon year” in 2006, when its launch was a hit with World Cup drinkers.

There was also an improvement in cider margins by 1.3 percentage points to 33.2 per cent, which Mr Dunsmore attributed to the company’s cost reduction and focused procurement efforts. A greater proportion of Magners volumes now comes from off-trade rather than pubs and restaurants.

Magners volumes in Northern Ireland declined 20.6 per cent as cross-Border activity subsided. Export volumes of Magners grew 34 per cent, driven by the US and Australian markets.

C&C’s Tennents beer business, acquired in September 2009, and Gaymers cider, bought in February 2010, added €15.6 million to the group’s operating profit.

The company had a net cash surplus at the half-year point and is “well-positioned to invest in our brands”, Mr Dunsmore said.

C&C’s shares closed up 2 per cent on the Iseq yesterday at €3.12.