29th Feb 2008 07:01
C&C Group Plc29 February 2008 TRADING STATEMENT FOR THE YEAR ENDING 29 FEBRUARY 2008 CCR.I CCR.L Dublin, London, 29 February 2008: C&C Group plc ('C&C' or the 'Group'), aleading manufacturer, marketer and distributor of branded beverages in Irelandand the U.K., today issued the following trading statement for the year ending29 February 2008. Preliminary results, for the year ending 29 February 2008,will be announced on 8 May 2008. Financial Overview Revenue from continuing operations(i) in the year ending 29 February 2008 isexpected to decline by approximately 9%, compared with 2006/07. The Group'soverall operating margin(ii) is expected to decline by under ten percentagepoints for the full year. Finance costs in the period are expected to benefitfrom a non-recurring foreign exchange gain of approximately €9m. The expected performance, which is in line with the guidance given in theInterim Management Statement issued on 16 January 2008, reflects a decline inthe Cider division, primarily as a result of the loss of market share by Magnersin Great Britain; the impact of poor summer weather; and an increase inoperating and marketing costs. As a result of increased capital expenditure associated with cider capacityexpansion and investment in working capital, free cash flow for 2007/08 isexpected to be only slightly positive. Operations Revenue in the Cider division for the full year is expected to decline byapproximately 10% arising from a volume decline of c. 4% for the Group's Irishcider brand, Bulmers, and a volume decline of c. 15% for the Group'sinternational cider brand, Magners. In an overall Republic of Ireland LAD(iii) market which is estimated to havedeclined by one to two percentage points for the period, Bulmers was negativelyimpacted by the particularly poor summer weather, when volumes declined by 14%in the quarter ended 31 August 2007. Over the second half of the year, Bulmersrecovered well with volumes unchanged on the same period last year. The performance of Magners primarily reflects the impact in Great Britain of aloss of on-trade market share and the negative carry-over impact of poor summerweather on recruitment to the premium cider category. This was partiallycompensated by the brand's strong off-trade volume growth of c.70% (iv). Magnersunderlying(v) volume in Great Britain is estimated to have declined by 28%overall in the second half year, compared with the same period last year. Shipment volumes in the Spirits & Liqueurs division are expected to show growthof 5%, driven by continuing double-digit growth for Tullamore Dew. It isexpected that overall depletions growth will be about 6% for the period.However, operating profit is expected to decline in 2007/08 partly due toincreased marketing investment in Tullamore Dew. The Distribution division is expected to show a double-digit decline in revenueas a result of the loss of the Fosters wine business at the end of the prioryear. The Group continues to implement the re-organisation and cost reductionprogramme, announced on 15 November, 2007. The programme is on track to achievethe forecast of €10m annualised savings (which are net of underlying rawmaterial cost inflation) and the overall cost of the re-organisation is expectedto be within the Group's estimate of €15m. Shareholder Returns Subject to Board approval, C&C intends to maintain the final dividend at lastyear's level of 15 cent per share giving a full year dividend of 27 cent pershare. C&C is committed to maintaining an efficient capital structure and recommencedits on market share buyback programme in January 2008. C&C repurchased 17.7mshares at a cost of €140m in the year ending February 2008. Outlook C&C's strategy is to drive growth in the premium cider category through a highlevel of consumer advertising in both Great Britain and Ireland. On the basis ofnormal summer weather, the Group expects the premium cider category to return togrowth in 2008. The combination of the Group's re-organisation and cost reduction programme anda series of marketing initiatives together with the strengthening of C&C'scommercial presence in Great Britain are expected to contribute to an improved C&C performance in 2008/09. These initiatives include the launch in Great Britainof draught Magners in May 2008 and in this regard C&C has entered into anagreement with Coors Brewers for its kegging and distribution. The new Managing Director for Magners Great Britain, John Holberry, will bejoining C&C on 18 March 2008. John joins the Group from Coors Brewers Limitedwhere he has been Managing Director, Coors Sales Operations since 2001. C&C plans to continue its market tests for Magners in Barcelona and Munich in2008/09. Execution of the tests will be modified to apply the findings from the2007/08 tests. The Group's Spirits & Liqueurs division, is expected to deliver growth in 2008/09 notwithstanding the negative impact of the US Dollar/Euro exchange rate. In summary, at this early stage, the Group expects modest overall revenue growthin 2008/09 and some improvement in operating margins. Foreign exchange hedgingis expected to insulate C&C in 2008/09 from the adverse effect of thedeterioration in the Sterling/Euro exchange rate. With a low level of capitalexpenditure, free cash flow conversion should improve significantly in 2008/09. Maurice Pratt, C&C Group CEO, concluded "Our objective in 2008/09 is tostabilise our financial and market performance, and, through a combination ofmanagement reorganisation, cost reduction and marketing initiatives, to delivergrowth." A restatement of the segmental analysis showing continuing operations for theyear ended 28 February 2007 is attached. (i) Excluding the Snacks division which was sold in September2006 and the Soft drinks division which was sold in August 2007 (ii) Continuing operations before exceptional items (iii) Long Alcohol Drinks (iv) Source: AC Nielsen, 11 months ended January 2008 (v) Adjusted for a pre price increase sell-in in February 2007 Trading Statement -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 at2.30pm (local Irish time) today. Dial in details are available from K CapitalSource on +353 1 631 5500 or c&[email protected] Forward Looking Statement This announcement includes forward-looking statements, including statementsconcerning expectations about future financial performance, economic and marketconditions, etc. These statements are neither promises nor guarantees, but aresubject to risks and uncertainties that could cause actual results to differmaterially from those anticipated. About C&C Group plc C&C Group plc is a leading manufacturer, marketer and distributor of brandedbeverages in Ireland and the UK. C&C manufactures the leading Irish cider brand,Bulmers, and the premium international cider brand, Magners, for export to theUnited Kingdom, the United States and Continental Europe. C&C also exportsspirits and liqueurs, including the premium Irish whiskey brand, Tullamore Dew,to over 80 international markets. Investors and analysts Irish Media International Media Mark Kenny or Jonathan Neilan Paddy Hughes Edward Orlebar or Charlotte KirkhamK Capital Source Drury Communications M CommunicationsTel: +353 1 631 5500 Tel: +353 1 260 5000 Tel: +44 207 153 1523/Email :c&[email protected] Email: [email protected] 1531 Email: [email protected] [email protected] RESTATEMENT OF SEGMENTAL RESULTS FOR YEAR ENDED 28 FEBRUARY 2007 Continuing Reported Disposals Operations •m •m •mRevenue Cider 517.9 - 517.9 Spirits & Liqueurs 79.1 - 79.1 Soft Drinks 185.2 (185.2) - Distribution 199.2 (57.7) 141.5 981.4 (269.9) 738.5 Operating Profit Cider 178.9 178.9 Spirits & Liqueurs 17.7 17.7 Soft Drinks 15.3 (15.3) - Distribution 0.7 2.3 3.0 Profit from continuing operations 212.6 (13.0) 199.6 Operating Profit Margin Cider 34.5% Spirits & Liqueurs 22.4% Distribution 2.1% 27.0% This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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