C&C concerned by falling sales of cider

CIDER SELLER C&C Group warned yesterday that the deteriorating economic environment and its poor sales in pubs would dramatically cut its revenues again this year with "difficult market conditions" expected to continue in the second half of the year.

A second summer of above-average rainfall in Ireland will also reduce the number of drinkers who pick up the habit of drinking cider during the vital summer "recruitment" months.

In a trading statement to the Irish Stock Exchange, C&C said revenue in its cider division, its main business, was expected to be down by about 11 per cent over the last six months compared to the same period last year.

Bulmers cider volumes in Ireland are expected to be down 11 per cent, while volumes of Magners in Britain will decline around 15 per cent.

C&C said the expected return to volume growth after a tough year in 2007 did not materialise.

This was "due to the worsening economic environment, continuing competitive pressure and a slower realisation of the benefits from market initiatives".

Despite the launch of draught Magners in Britain, pressure will continue on revenue and operating profit for the remainder of C&C's current financial year.

Shipments of spirits and liqueurs are expected to increase 3 per cent over the six months to the end of August compared to the same period in 2007.

Overall group revenue for the period is expected to be down 8 per cent.

However, margins are expected to improve due to the group's restructuring programme.

Analysts at Davy Research, Goodbody Stockbrokers and NCB Stockbrokers all cut earnings per share forecasts for the drinks group yesterday.

Davy Research analyst John O'Reilly added that it would take time for draught Magners to contribute significantly to C&C's volumes.

After opening lower, C&C's share price climbed during the day and closed up 5 per cent, adding 12 cent to €2.47.