Drinks and snacks group C&C, whose brands include Bulmers and Ballygowan, said yesterday it was on track to meet expectations for the full year despite the impact of the smoking ban on the pub trade.
The company, which released its first set of interim results since its flotation last May, posted a 6 per cent rise in operating profit to €64.2 million.
But it said the trading environment in the period was characterised by a number of adverse factors including unseasonal summer weather, a mixed tourist season and the introduction of the smoking ban last March.
"While the impact of the smoking ban over the winter months is unpredictable, the group believes that it is on track to deliver earnings in line with current market expectations," chairman Mr Tony O'Brien said.
C&C said that the ban had resulted in a fall-off in the mid-to- high single digits in its main market - the long alcohol drinks market - since the end of June, although this was partially offset by a pick-up in its off-trade business.
"It's reasonable to expect this trend to continue in the winter months," chief executive Mr Maurice Pratt said, adding the group did not anticipate a more marked downturn despite the arrival of colder weather.
The company sees the smoking ban as a once-off impact and believes the market will begin to stabilise next year.
Shares in C&C, which listed at a price of €2.26 last May, closed last night at €2.38, up 3 per cent on the day.
The company, which said it would pay an interim dividend of 5.5 cent per share, reported a 6 per cent rise in turnover from continuing operations to €386.3 million. Operating profit rose to €64.2 million from €60.5 million while adjusted earnings per share were slightly ahead of expectations at 14.6 cent.
C&C's alcohol division posted an operating profit of €39.5 million, an increase of nearly 9 per cent, on turnover of €226 million as sales of its principal brand, Bulmers cider, grew by 4 per cent, outperforming the market.
The group's export cider brand, Magners, performed strongly in Northern Ireland and was rolled out in Scotland where it is performing ahead of expectations and is approaching a break-even position. C&C is now planning a roll out in other parts of the British market next year.
Its wine and spirits distribution business fared less well, however, hit by the decline in the spirits market and a shift in wine sales to the off-trade business and to lower-priced wines.
The business accounts for just 8 per cent of the alcohol division but C&C is taking measures to stem the decline, including changes to its offering.
Its international division recorded a 24 per cent rise in operating profit to €7.7 million as sales rose by 14 per cent to €28.8 million, reflecting strong shipments growth in both Carolans liqueur and Tullamore Dew.
C&C's soft drinks and snacks division was the most pedestrian as profits declined and margins fell. Operating profit was down by 5.5 per cent to €17 million while turnover was up by 0.8 per cent to €131.5 million as C&C faced intense competition in the bottled water category and invested heavily in marketing to promote new products such Tayto Honest, which has taken a 3 per cent market share since its launch in July.
C&C said its flotation cost €29 million, including underwriting and other costs of €19.8 million and €9.1 million relating to the refinancing of existing debt.
The company is applying free cash flow to pay down its debt. Net debt at August 31st stood at €452.6 million, as cash flow reduced the level by €34 million.
The group's net interest bill fell by €13.8 million to €12.4 million in the first half, reflecting the drop in debt levels following the sale of Italian subsidiary Babero last December.
