(Adds divisional breakdown, more details on profit and outlook)
LONDON (Thomson Financial) - C&C Group Plc. said its full-year profit dipped
sharply, reflecting a decline in cider sales, the impact of poor summer weather
in Ireland and Great Britain and an increase in operating and marketing costs.
The Irish drinks company said it expects modest overall revenue growth and
some improvement in operating margins in the year to end-February 2009, noting
that its performance in the year to date has been affected by low consumer
confidence and poor spring weather.
The maker of Magners cider said its operating profit before exceptional
items plunged 37.3 percent to 125.2 million euros, with revenues falling 8.1
percent to 679.0 million.
Full-year pretax profit fell to 103.9 million euros from 176.9 million
euros.
The company proposed a final dividend of 15 cents per share, leaving its
total dividend unchanged on-year at 27 cents as previously flagged.
Lower sales volumes for the year to Feb. 29, 2008, were mainly a result of
C&C losing share of the premium cider market in Great Britain, and poor summer
weather leading to low demand.
C&C said cider sales volumes fell 11 percent and the company increased its
cider marketing spend 41 percent to 68 million euros, as it took measures to
improve the division's performance. Cider revenues fell 8.2 percent to 470.5
million euros, reflecting the fall in volumes.
The division's operating profit also decreased, by 39.5 percent to 107.5
million euros, with operating margin narrowing 11.9 percentage points to 22.8
percent. C&C said the slimmer operating margin was a result of weak volumes and
substantially higher manufacturing costs and marketing investment.
Spirits and Liquers faired better, boosted by a 27 percent increase in
marketing investment, mainly aimed at premium Irish whiskey Tullamore Dew. Sales
volumes of Tullamore Dew increased 22 percent, but Irish cream liqueur Carolans
volumes fell 7 percent.
Overall, the division's revenue increased 12.3 percent on-year to 87.5
million euros, though a narrower operating margin led to a 5.4 percent fall in
its operating profit to 15.8 million euros.
C&C said it expects the premium cider category in Great Britain to return to
growth in 2008 given normal summer weather, and that it is seeking to drive
growth of Magners sales volumes in Great Britain with a high level of consumer
advertising and increased trade marketing.
TFN.newsdesk@thomson.com
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