Trading Statement
C&C Group Plc
01 September 2006
TRADING STATEMENT
FOR THE SIX MONTHS ENDED 31 AUGUST 2006
CCR.I CCR.L
Dublin, London, 1 September, 2006: C&C Group plc ('C&C' or the 'Group'), a
leading manufacturer, marketer and distributor of branded beverages in Ireland
and the U.K., today issued the following trading statement for the six months
ended 31 August 2006. Interim results, for the six months ended 31 August 2006,
will be announced on 12 October, 2006.
Financial Overview
Turnover growth, for the six months to 31 August 2006, compared with the same
period in 2005, is expected to be in excess of 25%. Notwithstanding
significantly increased marketing investment the overall operating margin(i) is
expected to increase by over four percentage points for the period.
This performance reflects strong growth in the Cider division, primarily as a
result of the excellent performance of Magners in Great Britain.
Operations
Turnover growth in the Cider division for the period is expected to be over 75%
arising from sales volume growth of c.7% for the Group's Irish cider brand,
Bulmers, and volume growth of c.250% for the Group's international cider brand,
Magners.
In an overall Republic of Ireland LAD(ii) market which is estimated to have been
flat in the period, Bulmer's underlying buoyancy was enhanced by particularly
good summer weather, enabling the brand to significantly outperform the LAD
market.
Magners' growth arose primarily in Great Britain where it is enjoying rapid
growth as a result of the national rollout which commenced in March of this
year. The rollout was helped by the excellent summer weather in Great Britain.
In addition to growth as a result of the rollout, Magners' more established
regions such as Scotland and Greater London have continued to show good volume
gains for the period.
International Spirits & Liqueurs' shipment volume growth was c.20% partly as a
result of stock building by our new distributors, who took over from Allied
Domecq. It is estimated that overall depletions growth was about 5% in the
period. Tullamore Dew continued its strong performance.
Turnover in the Soft Drinks & Snacks division is expected to be down by c. 3%
reflecting the loss of the Danone Water brands. Underlying performance was
broadly stable with the benefit of good summer weather offset by continuing
price pressure.
The Distribution division is expected to show a decline in turnover and profit
as a result of the loss of the former Allied Domecq brands.
Goodwill
C&C will lose the distribution rights to the wine brands owned by the Fosters
Group in early 2007. This will reduce the profits of the Distribution division
and, as a result, the Group intends to write off the €8m carrying value of
goodwill attributed to that division at 31 August 2006.
Capital Expenditure
Due to capacity constraints C&C is experiencing difficulties in meeting the full
market demand for Magners, particularly in relation to take-home packs. To
address this and to allow for further growth C&C proposes to bring forward the
next phase of its Cider expansion plan with a view to having increased capacity
operational prior to Summer 2007.
The resulting investment in both fixed and working capital will reduce the
Group's FCF/EBITDA(iii) expectation to a 30%-40% range in each of 2006/07 and
2007/08 fiscal years.
The decline in the FCF/EBITDA ratio, however, will not affect the Group's
dividend policy.
Second Half Outlook
C&C expects Magners' strong growth to be sustained in the second half year.
This should lead to an acceleration in the rate of overall Group operating
profit growth for the second half of the 2006/07 year compared with the rate of
growth in the half year to 31 August 2006.
Trading Statement -Investor and Analyst Conference Call Details
Maurice Pratt, Group Chief Executive Officer and Brendan Dwan, Group Finance
Director will host a conference call for investors and analysts at 2.30pm (local
Irish time) today. Dial in details are available from K Capital Source on +353 1
631 5500 or c&cgroup@kcapitalsource.com
(i) Before exceptionals and amortisation
(ii) Long Alcohol Drinks
(iii) Free Cash Flow/Earnings Before Interest, Tax, Depreciation and
Amortisation
About C&C Group plc
C&C Group plc is a leading manufacturer, marketer and distributor of branded
beverages in Ireland and the UK. C&C manufactures the leading Irish cider brand,
Bulmers, and the premium international cider brand, Magners, for export to the
United Kingdom, the United States and Continental Europe. C&C also exports
spirits and liqueurs, including the premium Irish whiskey brand, Tullamore Dew,
to over 80 international markets.
The Group's portfolio also comprises some of Ireland's leading beverage brands
including Club soft drinks and Ballygowan bottled water. C&C also distributes
within the Irish market several leading international brands, owned by third
parties, including 7UP and Pepsi soft drinks and a wide portfolio of wines and
spirits.
Investors and analysts Irish Media International Media
Mark Kenny/Jonathan Neilan Paddy Hughes/ 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: c&cgroup@kcapitalsource.com Email: phughes@drurycom.com Email: orlebar@mcomgroup.com
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