CC three-month revenue 13% down on previous year

DRINKS GROUP CC’s revenue for the three months to the end of November fell by 13 per cent compared to the same time the previous year, the company said yesterday.

In an interim management statement to shareholders, CC said its performance reflected “very weak consumer demand” as well as strong competition in both markets.

Growth of 1 per cent in its spirits and liqueurs division only partially offset a 19 per cent decline in its main cider division.

Revenues from Bulmers cider fell 17 per cent, while Magners revenues in Britain dropped 24 per cent, partly as a result of increased discounting and a shift by consumers away from pubs to off-trade purchases.

Davy equities analyst John O’Reilly said the decline in Irish sales was “quite staggering”, even in the context of a subdued Irish pub trade, and said the task facing the company’s new management, led by former Scottish Newcastle chief executive John Dunsmore, “looks now even more daunting”.

Group operating margin for the quarter was down by about three percentage points on the same period in 2007.

CC said that trading had continued to decline year-on-year over the Christmas period, with margins considerably weaker as a result of continuing competitive pressure.

January and February is not traditionally a big time for cider sales, with the result that CC expects its weak performance to continue for the time being.

The group lowered its expectations for overall operating profit for its financial year to the end of February to €90 million.

The company said that as a result of a decline in investment values, its pension deficit will increase from €32.3 million as of August 2008 to about €60 million at the end of 2008. CC will contribute a payment of €20-€25 million into the group pension scheme before the end of the financial year.

The cider maker said that it would explore its options to fund the remaining deficit of €35-€40 million and would prepare a funding plan in the coming months.

Goodbody Stockbrokers equities analyst Liam Igoe lowered his full-year earnings forecasts by 9 per cent as a result of weaker than expected Irish revenues.

CC fell 8 per cent in trading on the Iseq index yesterday, closing down 10 cents at €1.11.