C&C's Sales Drop as Britons Drink Less Magners Cider
C%26amp;C Group Plc, the Irish beverage
maker whose shares lost two-thirds of their value in 2007, said
sales from continuing operations fell 9 percent in the year that
ends today on waning British demand for Magners cider.
The Dublin-based company expects “modest revenue growth
in fiscal 2009, according to a statement released today.
The shares plunged 70 percent in 2007 after the U.K.s
wettest summer on record hurt sales and Scottish %26amp; Newcastle Plc
added competing cider varieties under brands such as Strongbow.
C%26amp;C last month hired John Holberry from Coors Brewers Ltd. to
revive U.K. sales, and is cutting about 150 jobs to save money.
Magners, which is currently sold in bottles in Britain, will be
sold on tap from May, C%26amp;C said in the statement.
“Overall, the statement gives the impression that 2009
will be a year of `steadying the ship with the company
endeavoring to set foundations for a longer term growth plan for
the British market, Liam Igoe, an analyst at Goodbody
Stockbrokers in Dublin, said in a research note.
The companys outlook for fiscal 2009 suggests that
earnings growth may be closer to 10 percent than Goodbodys
previous 24 percent estimate, said Igoe, who has a “buy
rating on C%26amp;C.
C%26amp;C shares closed unchanged at 4.50 euros in Dublin today,
giving the company a market value of 1.41 billion euros ($2.1
billion). The stock has added 9.8 percent this year.
Tullamore, Carolans
The operating margin, a profitability gauge, narrowed by
less than 10 percentage points in the year, the company said,
meeting a January forecast. C%26amp;C expects margins to widen in
2008-09.
Revenue at the cider unit, C%26amp;Cs main revenue generator,
declined by about 10 percent during the year, after sales
volumes fell about 15 percent in Britain, todays statement
shows. Cider sales volumes in Ireland dropped about 4 percent.
Operating profit from the companys spirits and liqueurs
division, which includes Tullamore Dew whiskey and Carolans
Irish Cream, probably declined in the latest fiscal year because
of higher advertising costs.
“Our objective in 2008/09 is to stabilize our financial
and market performance, and, through a combination of management
reorganization, cost reduction and marketing initiatives, to
deliver growth, said Chief Executive Officer Maurice Pratt.
Holberry will become managing director of Magners in
Britain as of March 18. He held the same title at Coors Sales
Operations and will join C%26amp;Cs board.
Coors Agreement
C%26amp;C said it entered an agreement with Coors for kegging and
distribution to introduce Magners on tap in the U.K. Magners is
still being tested in Barcelona and Munich, it said today.
The company said in November it would eliminate jobs to
help save 10 million euros ($15 billion) a year after sales
growth collapsed at the cider unit. The job cuts equate to about
7.5 percent of its workforce. About 80 percent of the forecast
savings are expected to be achieved by the fiscal year ending in
February 2009. The program led to a charge of about 15 million
euros in the fiscal year ending today.
C%26amp;C introduced Magners in Britain in 2004, marketing it as
a premium product served over ice. The company fueled demand
with televised advertisements using the slogan “Time dedicated
to you and music from vintage pop songs such as Donovans 1966
hit “Sunshine Superman. Magners also sponsors rugby union
club London Wasps to keep its brand in the public eye.
The company uses the Magners brand outside Ireland and the
Bulmers name in its home market. Bulmers is owned in the U.K. by
Scottish %26amp; Newcastle, the countrys largest brewer.
C%26amp;C is scheduled to report annual results on May 8.
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