C&C expects to report 9% decline in revenues

CLONMEL-BASED drinks group C&C expects to report a 9 per cent decline in revenues for the year to the end of February when full-year results are published on May 8th.

This would reduce its turnover from €738.5 million to €672 million when its soft drinks arm, which was offloaded to Britvic last year, and the loss of a large distribution contract are stripped out.

But the company hopes to boost its performance this year with the launch in Britain of draught Magners in May. C&C said yesterday that it had entered into an agreement with Coors Brewers for its kegging and distribution of the draught product.

C&C said it expects "modest overall revenue growth" this year and "some improvement in operating margins".

Chief executive Maurice Pratt, said: "Our objective in 2008/09 is to stabilise our financial and market performance, and, through a combination of management reorganisation, cost reduction and marketing initiatives, to deliver growth."

C&C's share price closed in Dublin yesterday unchanged at €4.50.

In a trading statement to the stock market, C&C said its overall operating margin is expected to decline by under 10 percentage points for the full year.

Finance costs in the period are expected to benefit from a non-recurring foreign exchange gain of about €9 million. These figures were in line with guidance provided in its interim management statement on January 16th.

The revenue decline reflects difficulties in the UK cider market where Magners has lost share due to increased competition from rivals, a rise in operating and marketing costs, and the impact of last year's extremely wet summer.

C&C said revenue in its cider division is expected to decline by about 10 per cent arising from a volume decline of 4 per cent for Bulmers in Ireland and of 15 per cent for Magners in the UK.

Shipment volumes in its spirits and liqueurs division are expected to show growth of 5 per cent. This is driven by double-digit growth for Tullamore Dew whiskey. It said "increased marketing investment" in Tullamore Dew would impact its operating profit.

C&C's distribution division, meanwhile, is expected to show a double-digit decline in revenue as a result of the loss of the Fosters wine business.

The group said its re-organisation and cost reduction programme is on track to achieve the forecast annualised savings of €10 million. The cost of the re-organisation is expected to be about €15 million.

C&C said it would maintain the final dividend at last year's level of 15 cent a share, giving a full-year dividend of 27 cent a share.

It said 17.7 million of its own shares had been bought back at a cost of €140 million during the year.