|
C&C report a drop in operating profits
IRISH drinks group C&C, the makers of Magners cider in Britain, saw its spate of bad luck continue last week when it reported a fall in first-half operating profit of more than 30 per cent.
The drop was blamed on increased competition in the cider market in Britain with Scottish & Newcastle, the owners of the international rights to the Bulmers’ brand launching its own cider product.
This said C&C along with the wet summer in Britain and Ireland were the primary reasons for its drop in profit.
Chief executive of C&C Maurice Pratt said that given the competitive nature of the British market, the company needed to sharpen its competitive focus and it has taken some steps to do that.
“We will have further measures which we intend to implement as we go into next year. I wouldn’t want to go into any details at this stage as it’s commercially sensitive,” he said.
Mr Pratt also commented on the expansion of Magners to Spain and Germany through trials in Barcelona and Munich.
He said these trials have gone well but ruled out any future trials in other countries, saying the company’s priority has to be restoring the business to growth.
Mr Pratt did not rule out any further job cuts at the firm’s Clonmel plant saying C&C would take further measures in the coming months to implement a restructuring and cost reduction programme.
“These measures are intended to restore growth in revenue and operating margin in 2008/09 and beyond,” he said.
He also played down talk of a takeover bid from Scottish & Newcastle saying the company has always said it wants to remain an independent business.
C&C said operating profit for the first six months to the end of August fell 33 per cent to e67.9million. It added cider revenue will show a “high single-digit’ decline in the six months ending February.
First-half profit more than doubled after the sale of snacks and soft-drinks units, it also reported.
Net income rose to e198.3million from e89.3million, including gains of e145.8million from selling its soft-drinks unit to Britvic and disposing of its snack business.
Cider revenue rose 1.2 per cent, though operating profit declined 36 per cent to e57.5million.
C&C said it expects a “small improvement’ in operating margins in the second-half compared with the first six months.
Liam Igoe, an analyst at Goodbody Stockbrokers, said: “The guidance for the second-half in the key cider division suggests that second-half sales will decline by about 8 per cent.
Sales at the C&C’s spirits and liquors division, which includes Tullamore Dew whiskey and Carolans Irish Cream, gained 14 per cent to e41million in the first-half while the operating margin declined 4.7 percentage points.
Mr Pratt said there are absolutely no plans to sell off its Tullamore Dew division. |
