Magners brewer sees cider sales turn sour

C and C Group, the Magners cider brewer, posted a rise in pre-tax profits despite a decline in revenues during a challenging year for the company.

Revenue fell from €770m to €716.7m, but a reduction in costs and finance expenses contributed to an increased profit before tax of €110.9 (2011 €79.5m), ahead of expectations of €105.13m. Earnings per share were also ahead of expectations at 29.4 cents, and almost eight cents higher than the previous year.

Group operating margin was up 2.9 percentage points to 23.1%, while earnings before interest, tax, depreciation and amortisation rose 6.7% to €131.5m.

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Revenues from cider fell by 7.0% from €136.4m to €126.8m, with volumes accounting for 3.0% of the decline, while beer revenues grew 16.2% from €13.6m to €15.8m after volumes increased 23% in a flat market.

Chief Executive Officer Stephen Glancey said: "We are pleased to report a strong financial and operating performance for the year, delivering operating profit in line with our stated guidance.

"This has been a robust year for the group. In our domestic markets, our brands and businesses performed well against a tough economic backdrop. Maintaining and developing our core domestic businesses has been a key objective, alongside brand innovation and international development. We are also building momentum across several markets in our international business."

The company was keen to emphasise that although group volumes fell by 10.5%, the positive impact of brand mix eased the net revenue decline to 4.8%, on a constant currency basis.

Both the Republic of Ireland and the UK markets experienced on-trade volume declines as consumer sentiment remained weak, while continued off-trade promotional activity and the challenge of new entrants resulted in another competitive year across the cider and beer categories, the group said. It stressed that its well invested brands and market positions enabled it to grow operating profits in the year supported by tight cost control and ongoing innovation.

The dividend per share has been raised to 8.17 cents from 6.6 cents the previous year.

The share price fell 3.91% to €3.44 by 13:37.

NR