Trading Update

RNS Number : 2941V

C&C Group Plc

08 July 2009

 



Trading Update

Dublin, London, 8 July 2009: C&C Group plc ('C&C' or the 'Group'), today issued the following trading update for the four months ended 30 June, 2009.

Overview & Outlook

Trading, for the first four months of FY2010, is ahead of the Group's expectations. For this period, revenues increased by 3%, year-on-year. This performance reflects an increase in revenue of 3% within the cider business and a decline in revenue of 12% in the Spirits & Liqueurs business (all on a constant currency basis). 

While the overall business environment is challenging, particularly in Ireland, the Group's cider business has benefited from a period of good summer weather and a successful launch for Bulmers Pear in the Republic of Ireland and Magners Pear in Great Britain ("GB") and Northern Ireland. 

The performance of the Spirits & Liqueurs business, however, has been adversely affected by difficult trading conditions and significant de-stocking. Consequently it is expected that operating profit within this division will decline by as much as a third in the current financial year, as the Group retains its brand investment levels despite materially lower volumes. C&C remains confident about the long-term prospects for this division.

Following four months of encouraging trading in the cider division, the Group now has a greater degree of visibility in and confidence about its plans for the current financial year. As a consequence, and as previously outlined, the Group intends to commit up to an additional €8m of brand investment following recent good weather conditions. With this investment, the Group expects to report an operating profit outcome for FY2010, at the top end of the Group's previously stated guidance range of €77m to €82m. 

Cider
Overall cider volumes, for the period, are ahead of plan and in-line with the same period last year. This performance is encouraging against a backdrop of challenging economic and business conditions. Furthermore, comparisons now become easier as we start to lap weaker comparative months for the remainder of the year.

In Ireland, the Group's performance to date is materially ahead of plan. C&C has taken a number of steps to ensure its brands are positioned to compete effectively in tough market conditions. The Group has re-organised its sales force, launched Bulmers Pear (together with a new advertising campaign) and reduced, from the beginning of June, the wholesale price for Bulmers Pint Bottles into the On-Trade by 10%. Overall volumes are up 4% in the first four months, which indicates some recovery from last year's substantial market share losses. While Bulmers Pear will inevitably cause an element of substitution with the Group's apple cider brands, it is contributing strongly to performance. Overall, cider revenue in Ireland increased by 7% year-on-year. Northern Ireland is also performing ahead of expectations. .

In Great Britain, overall cider volumes are down by 4% in the period, which is also better than plan. This performance still implies a loss of share of a growing cider category in GB. The launch of Magners Pear has been strong and UK specific television advertising coupled with an outstanding product have resulted in Magners Pear delivering significant growth in GB in the period. While as in Ireland some degree of substitution is inevitable, the initial success of the launch supports the Group's objective to stabilise cider volumes in the current year. In addition, this performance, following a 20% decline in volumes last year, underscores the underlying strength of the Magners brand and is providing an important stimulus to the overall cider category in the UK. Significant promotional activity for Magners Original in the Off-Trade has ended and the brand's premium is returning. The performance of draught Magners Original remains slower than anticipated and Pint Bottle sales of Original in the GB On-Trade, remain a challenge and an area of increased focus. On a constant currency basis, GB cider revenue declined by 1% in the first four months.

Clonmel Operations

The Group's re-organisation and re-structuring programme at the Clonmel facility is progressing in line with expectations. Since the programme was announced, employment terms and conditions have been modified, headcount has been reduced by 120 and a pay freeze has been implemented (with some wage reductions agreed in certain areas). The programme is on track to deliver the expected €5m of savings in the current financial year. Modifications to the Group's procurement initiatives are also delivering synergies and savings. Despite the changes to working practices and conditions, customer service levels have been maintained

Spirits & Liqueurs

The Spirits & Liqueurs business remains extremely challenging with de-stocking continuing across all markets. Shipments declined by 16% compared with the same period last year. However the Group continues to invest selectively behind its brands at a higher percentage of net sales than last year and, based on Nielsen in-market data, C&C is holding or increasing market share. The Group does not expect any near term improvement in trading within this division.

Currency

The Group is exposed to sterling exchange rate movements for the last four months of the current financial year. Assuming the current strength of sterling continues, it will have a positive impact on the Group's financial outcome for the second half. The positive impact of currency is reflected in the Group's revised guidance of an operating profit outcome for FY2010 at the top end of the Group's previously stated guidance range of €77m to €82m. 

Trading Statement - Institutional Investor and Analyst Conference Call Details

Stephen Glancey, Finance Director and COO, and Kenny Neison, Strategy Director, will host a conference call for investors and analysts at 14.30 (local Irish time) today. Dial-in details are available from K Capital Source on [phone] or c&[e-mail]

C&C will provide a further update on trading on 28 August 2009, the date of the Group's Annual General Meeting.

ENDS

Investors and Analysts	Irish Media	International Media
Mark Kenny/Jonathan Neilan K Capital Source Tel: [phone] Email:  c&[e-mail]	Paddy Hughes/ Anne-Marie Curran Drury Communications Tel:    [phone] Email:    [e-mail]	Robert Ballantyne/Shanshan Willenbrock Cardew Group Tel:    [phone] Email: [e-mail]

About C&C Group plc

C&C Group plc is a manufacturer, marketer and distributor of branded beverages in Ireland and the UK. C&C manufactures the Irish cider brand, Bulmers, and the international cider brand, Magners, for export to the United Kingdom, the United States and Continental Europe. C&C also exports Spirits & Liqueurs, including the premium Irish whiskey brand, Tullamore Dew, to over 80 international markets.

Special Note regarding forward-looking statements

The announcement includes forward-looking statements, including statements concerning expectations about future financial performance, economic and market conditions, etc. These statements are neither promises nor guarantees, but are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. 

 

END

 

 

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