Good weather boosts revenues at CC

GOOD WEATHER helped revenues at cidermaker CC in the four months to the end of June, according to a mostly positive trading statement released by the company yesterday.

CC’s management told investors that, although the overall business environment remained “challenging”, particularly in Ireland, its cider sales had been lifted by a period of clement summer weather and the successful launch of its pear cider brands.

The company, which changed its management late in 2008, said it intended to commit an additional €8 million in brand investment following the recent good weather.

“With this investment, the group expects to report an operating profit outcome for the full-year 2010 at the top end of the group’s previously stated guidance range of €77 million to €82 million,” the trading update read.

Overall, cider volumes for the period were “ahead of plan” and in line with the volumes sold during the same period in 2008, according to the company.

“This performance is encouraging against a backdrop of challenging economic and business conditions,” it said.

Volumes of its Bulmers brand in Ireland are up 4 per cent on last year, helped by a 10 per cent reduction in the wholesale price for Bulmers pint bottles in the ontrade (bars and restaurants) channel.

CC said it expected that the launch of Bulmers Pear would “inevitably cause an element of substitution” with its apple cider brands, but it was “contributing strongly to performance” nevertheless. Overall cider revenue in Ireland has increased 7 per cent year-on-year.

In Britain, volumes of Magners cider were down 4 per cent in the period, implying a loss of market share in what is a growing drinks category there. The performance of draught Magners was “slower than anticipated”.

Meanwhile, the company’s spirits and liqueurs business has been hit by “significant” cutbacks on stock carried by vendors.

Operating profit in the division is expected to decline by up to a third in CC’s current financial year, which runs to the end of February 2010.

But CC said it remained “confident” about the long-term prospects for the division, which it believes provides a hedge to the more seasonal cider business.

The statement was well received by shareholders. CC’s share price bounced 7 per cent in the hours after the statement’s release, before selling off at the close of the session to end at €2.30, down 3.3 per cent on Tuesday’s closing price.