C&C profits boosted by strong recovery in international cider sales

DRINKS COMPANY C&C enjoyed a 17 per cent rise in operating profits before exceptionals last year, boosted by a strong recovery in cider sales in the UK and international markets.

Results for the year ended February 2011 – the first full year to take account of the recently acquired Tennent’s and Gaymers businesses – show that operating profit before exceptions increased by 17 per cent to €105 million.

Some €4.5 million of this derived from C&C’s spirits and liqueurs business which it sold during the year, while the company’s newly acquired businesses accounted for €30 million of overall operating profits.

Revenues jumped by 46 per cent to €530 million, again boosted by acquisitions. The company is guiding EBIT of between €108 and €115 million for the coming year.

The strong results, which were within guidance, were driven by the company’s resurgent cider business, which accounts for 68 per cent of C&C’s operating profits.

Sales of its Magners brand grew by 3.6 per cent in Britain last year,with chief executive John Dunsmore saying yesterday he expected to increase market share further next year as the cider market expanded by 10 per cent.

Magners also enjoyed strong growth internationally, with volumes up 34 per cent in export markets such as North America and Australia.

The strong UK and international performance was offset by continuing challenges in the Irish market, with Bulmers volumes down by 2.4 per cent.

Overall, net debt at the company was reduced from €365 million to €6 million at the end of February 2011, while the company reported strong cash flow generation following the disposal of its spirits business last year.

Commenting on the results yesterday, Mr Dusmore said the company had achieved its key corporate objectives for the year - achieving savings of €8 million from acquisitions and disposals, building momentum behind the Magners brand for the first time since 2006, and holding market position in Ireland during an extremely tough year.

He also highlighted the company’s success in sustaining operating margin at 19 per cent of net revenue for continuing operations despite the low margin nature of the acquired businesses, particularly Gaymers.