13th Jul 2007 07:00
C&C Group Plc13 July 2007 Interim Management Statement for the three months ended 31 May, 2007 Dublin, London, 13 July, 2007: C&C Group plc ('C&C' or the 'Group'), a leadingmanufacturer, marketer and distributor of branded beverages in Ireland and theUK, today issued the following Interim Management Statement for the three monthsto 31 May 2007, in advance of the Company's AGM to be held at 12.00 noon todayin the Westbury Hotel, Grafton Street, Dublin 2. C&C is issuing this statementin line with the reporting requirements of the EU Transparency Directive. Revenue Revenue(i) growth for the quarter to 31 May, 2007 shows an increase of 15%compared with the same period last year. This performance primarily reflects thegrowth of Magners in Great Britain and Bulmer's continuing out-performance ofthe LAD market in Ireland. Total branded cider(ii) sales volumes, in the first quarter, increased by 38% onthe prior year. This primarily reflects growth of Magners in Great Britain ofc.89% and Bulmers in Ireland of c. 2%. Performance in the three months to 31May, 2007 was negatively impacted by a pre-price increase sell-in in Februarywhich consequently affected sales shipments during the quarter. Underlyingvolume growth for Magners in Great Britain, allowing for this, is estimated atc. 130% in the quarter - a satisfactory performance in a cider marketcharacterised by mixed weather in the period (good in April and poor in May) andheavy price-led competition. Performance was boosted by comparison with the sameperiod last year when the brand was being rolled out from London to the rest ofEngland and Wales. In the quarter to 31 May 2007 Magners underlying cider volume growth wasbroadly in line with the Group's full year guidance in relation to GreatBritain. On-trade distribution in the quarter held at 67% while,on an MAT basis,market share of LAD improved from 1.7% at 28th February 2007 to 2.0% at 31stMay, 2007 (Source: AC Nielsen). Revenue for Spirits & Liqueurs declined by 6% in the period due to phasing ofshipments while Soft Drinks revenue grew by 7%. Margins Group operating margin(i) for the quarter was over three percentage pointslower in the first quarter than in the same period last year. This declinereflects increased marketing expenditure and warehousing costs together with adecline in gross margin due to a combination of increased raw material costs andhigher fixed manufacturing costs associated with cider capacity expansion. Other Magners market tests are continuing in Barcelona and Munich. In line withprevious guidance, it will be October 2007 before any initial conclusion can bedrawn as to Magners' future prospects in these markets. The Group's expansion of its cider manufacturing capacity is proceeding to planand the new capacity is now operational. C&C's capacity expansion will involvecapital expenditure of approximately €160 million in the 2007/08 fiscal year. During the quarter, the Group entered into an agreement to sell its soft drinksdivision and related assets (Republic of Ireland wholesaling) to Britvic plc fora consideration of €249.2 million, payable in cash upon completion. Subject toCompetition Authority approval, completion of the sale is expected to occur by31 August 2007. The Group recently commenced an on-market share buy back programme. Since theprogramme commenced in mid June, the Group has acquired 5.5 million shares at anaverage price of €10.59 per share. Outlook C&C's sustained investment is creating a strong consumer franchise for Magnersin Great Britain - reflecting the premium positioning which C&C's Bulmers brandenjoys in Ireland. This underpins the Group's confidence in the brand's ongoinggrowth potential. The second quarter of the year is crucial to full year performance for reasonsboth of its seasonal importance and the impact of summer recruitment onperformance for the rest of the year. Very poor weather in June and into Julytogether with continued heavy price-led competition is likely to lead to a weaksecond quarter and, as a result, while the Group expects strong volume growthfor the full year in Great Britain it is reducing its sales volume expectations. The Group's current high level of marketing investment and other fixed costsresult in financial performance being particularly sensitive to variations insales volumes. While these costs will ultimately be absorbed as cider volumesgrow, lower sales volume expectations are likely to result in full yearoperating profit(iii) for 2007/08 approximately matching last year. The weighting of marketing investment to the first half year, the phasing ofcosts associated with capacity expansion and the impact of the February sell-inare expected to result in a decline in operating profit in the half year endingAugust 2007 compared with the same period last year. The next update on performance will be on 31 August, 2007 when the Group willissue its first half trading statement. (i) Continuing operations - before exceptional items and excluding Snacks division. (ii) Combined Bulmers and Magners (iii) Continuing operations - before exceptional items and excluding Snacks and Soft drinks divisions. Investor and Analyst Conference Call Details Maurice Pratt, Group Chief Executive Officer and Brendan Dwan, Group FinanceDirector will host a conference call for institutional investors and analysts at10.30am (local Irish time) today. Dial in details are available from K Capital Source on +353 1 631 5500 or c&[email protected] Investors and analysts Irish Media International Media Mark Kenny or Jonathan Neilan Paddy Hughes or Ann-Marie Curran Edward OrlebarK Capital Source Drury Communications M Communications Tel: +353 1 631 5500 Tel: +353 1 260 5000 Tel: +44 207 153 1523 Email : Email: [email protected] Email:c&[email protected] [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
C&C Group