C&C Group Plc
13 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 leading
manufacturer, marketer and distributor of branded beverages in Ireland and the
UK, today issued the following Interim Management Statement for the three months
to 31 May 2007, in advance of the Company's AGM to be held at 12.00 noon today
in the Westbury Hotel, Grafton Street, Dublin 2. C&C is issuing this statement
in 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 the
growth of Magners in Great Britain and Bulmer's continuing out-performance of
the LAD market in Ireland.
Total branded cider(ii) sales volumes, in the first quarter, increased by 38% on
the prior year. This primarily reflects growth of Magners in Great Britain of
c.89% and Bulmers in Ireland of c. 2%. Performance in the three months to 31
May, 2007 was negatively impacted by a pre-price increase sell-in in February
which consequently affected sales shipments during the quarter. Underlying
volume growth for Magners in Great Britain, allowing for this, is estimated at
c. 130% in the quarter - a satisfactory performance in a cider market
characterised by mixed weather in the period (good in April and poor in May) and
heavy price-led competition. Performance was boosted by comparison with the same
period last year when the brand was being rolled out from London to the rest of
England and Wales.
In the quarter to 31 May 2007 Magners underlying cider volume growth was
broadly in line with the Group's full year guidance in relation to Great
Britain. 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 31st
May, 2007 (Source: AC Nielsen).
Revenue for Spirits & Liqueurs declined by 6% in the period due to phasing of
shipments while Soft Drinks revenue grew by 7%.
Margins
Group operating margin(i) for the quarter was over three percentage points
lower in the first quarter than in the same period last year. This decline
reflects increased marketing expenditure and warehousing costs together with a
decline in gross margin due to a combination of increased raw material costs and
higher fixed manufacturing costs associated with cider capacity expansion.
Other
Magners market tests are continuing in Barcelona and Munich. In line with
previous guidance, it will be October 2007 before any initial conclusion can be
drawn as to Magners' future prospects in these markets.
The Group's expansion of its cider manufacturing capacity is proceeding to plan
and the new capacity is now operational. C&C's capacity expansion will involve
capital expenditure of approximately €160 million in the 2007/08 fiscal year.
During the quarter, the Group entered into an agreement to sell its soft drinks
division and related assets (Republic of Ireland wholesaling) to Britvic plc for
a consideration of €249.2 million, payable in cash upon completion. Subject to
Competition Authority approval, completion of the sale is expected to occur by
31 August 2007.
The Group recently commenced an on-market share buy back programme. Since the
programme commenced in mid June, the Group has acquired 5.5 million shares at an
average price of €10.59 per share.
Outlook
C&C's sustained investment is creating a strong consumer franchise for Magners
in Great Britain - reflecting the premium positioning which C&C's Bulmers brand
enjoys in Ireland. This underpins the Group's confidence in the brand's ongoing
growth potential.
The second quarter of the year is crucial to full year performance for reasons
both of its seasonal importance and the impact of summer recruitment on
performance for the rest of the year. Very poor weather in June and into July
together with continued heavy price-led competition is likely to lead to a weak
second quarter and, as a result, while the Group expects strong volume growth
for 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 costs
result in financial performance being particularly sensitive to variations in
sales volumes. While these costs will ultimately be absorbed as cider volumes
grow, lower sales volume expectations are likely to result in full year
operating profit(iii) for 2007/08 approximately matching last year.
The weighting of marketing investment to the first half year, the phasing of
costs associated with capacity expansion and the impact of the February sell-in
are expected to result in a decline in operating profit in the half year ending
August 2007 compared with the same period last year.
The next update on performance will be on 31 August, 2007 when the Group will
issue 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 Finance
Director will host a conference call for institutional investors and analysts at
10.30am (local Irish time) today. Dial in details are available from K Capital
Source on +353 1 631 5500 or c&cgroup@kcapitalsource.com
Investors and analysts Irish Media International Media
Mark Kenny or Jonathan Neilan Paddy Hughes or Ann-Marie Curran Edward Orlebar
K Capital Source Drury Communications M Communications
Tel: +353 1 631 5500 Tel: +353 1 260 5000 Tel: +44 207 153 1523
Email : Email: phughes@drurycom.com Email:
c&cgroup@kcapitalsource.com orlebar@mcomgroup.com
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