Operating profit at drinks maker C&C rose almost 30 per cent in the six months to the end of August, but the Irish market continued to weigh on net revenues.
The company said its overall profit from continuing operations was €63.4 million for the six month, 29.4 per cent more than in the same period of 2009. Including its discontinued operations, that figure was €67.9 million.
Gross revenue for the period increased by 106.7 per cent on a constant currency basis to €451.6 million. While net revenue increased 73 per cent to €305.5 million, revenues in the Irish cider business fell 8.1 per cent to €58.1 million.
Weak consumer environment and continued migration of volumes to the off-trade channel were partly to blame for the pressure on revenues, but the company said more than half of the decline was attributable to price.
“This is slightly better than the 5.4 per cent price/mix decline recorded in 2009/10 but the relative improvement is more to do with the weighting of Bulmer’s channel mix and should not be interpreted as an easing in trading conditions,” C&C said.
The company reduced wholesale pricing of draught Bulmer’s in May 2010, following on from a price drop on the on-trade pint bottle in June 2009.
“Wholesale price reductions in the on trade for packaged in June 2009 and draught in May 2010, together with increased price support in the off trade, are the significant factors contributing to the 4.4 per cent price /mix impact on net revenues in the ROI,” C&C said.
Bulmer’s volume was down 3.4 per cent in Ireland, while operating profits in the market also declined, falling 8.6 per cent on a constant currency basis.
“Trading patterns in the second quarter were also influenced by increased competition in the off trade around world cup promotional activity,” it said.
“The difficulties facing the Irish consumer were recognised by the group, as was the need to proactively support both the trade and the consumer through investment in price.”
C&C also launched Bulmer’s Berry during the period, saying it provided further stimulus for the brand.
C&C chief executive John Dunsmore described the Irish market as “challenging”, adding that conditions in both the key British market and Ireland were “unpredictable and very tough”.
In the Magner’s business, total volume rose 1.6 per cent year on year. The brand returned to volume growth in Britain for the first time since 2007, gaining 0.7 per cent. However, volumes in Northern Ireland fell 20.6 per cent as cross border activity fell.
Export volumes of the brand grew 34.4 per cent, accounting for 12 per cent of its total volumes in the period.
The group has increased its investment in the US market, recruiting additional staff, while the category of cider is “enjoying good growth” in Australia, according to C&C strategy director Kenny Neison.
The group had the effect of a number of disposals and acquisitions to take note of during the six months. Acquisitions contributed operating profit of €15.6 million, while the original cider business saw its profit decline 1.8 per cent to €47.9 million.
The Tennents brand contributed €59.6 million to net revenue, and €10.4 million to operating profit, while the distribution business accounted for €36.8 million and €2.2 million in revenue and profit respectively. The Gaymer’s Cider business, which C&C said it would acquire in November last year, contributed €51.8 million in revenues and €3 million in operating profit.
During the six months, C&C sold its spirits and liqueurs business to William Grant & Sons for €300 million.
The company had a net cash surplus at the half-year point and is "well-positioned to invest in our brands", Mr Dunsmore said.
C&C's pension deficit deteriorated over the first half, swelling from €21.2 million in February to €49.7 million at the half year.
It said "good progress" had been made on reforms to its defined benefit pension scheme ahead of a May 2011 deadline to submit a funding proposal to the Pensions Board.
C&C said it expected to make an operating profit of €102-€106 million for its fiscal year to the end of February 2011.
Shares in the company were up 2 per cent to €3.12 on the Dublin market by 3.30pm.