Drink and snacks group C&C said yesterday that the rollout of Magners cider in England and Wales is going well and the group is still aiming to double its market share in Britain this year.
The launch, which began six weeks ago, is focusing on 20 major centres of population, including Manchester, Birmingham, Liverpool, Leeds and Cardiff.
Supported by a €30 million advertising programme, the bulk of which is being spent in the first half, it aims to lift Magners' market share in Britain to 1 per cent from 0.5 per cent.
Magners, which is already sold in Northern Ireland, Scotland and London, performed very strongly in the year to the end of February and is expected to prove one of the main drivers of growth in the 2006/2007 financial year.
Its success, and that of Bulmers in the Republic, offset weakness in C&C's soft drinks and snacks business and helped the company to deliver better than expected full-year results yesterday.
Revenue grew by 9 per cent to €817 million as operating profit rose by 13 per cent to €124.7 million. Adjusted earnings per share were up by 16 per cent to 29.9 cent, ahead of market forecasts of 28.5 cent. C&C said it would pay a final dividend of 8.5 cent per share, bringing the total dividend to 15 cent, up 15 per cent on the previous year. Shares in the company surged 40 cent, or 6 per cent, to €6.70, as analysts welcomed the better than expected earnings per share, dividend and net debt levels and upgraded their forecasts.
The group said it expected to deliver double-digit profit growth again in the current year, despite the planned marketing investment in Magners and the recent termination of its distribution agreements with Allied Domecq and Danone, which will impact profits in the current year.
But Magners and Bulmers, along with C&C's Irish whiskey brand Tullamore Dew, will remain the engines of growth.
In the year to February 28th, revenue from cider, which now accounts for 68 per cent of group profits, rose by 31 per cent to €278 million, driven in large part by the successful rollout of Magners in London.
Operating profit in the division rose by 32 per cent to €85.3 million as volumes of Magners soared by 130 per cent. It now has a 6.5 per cent share of the pub trade in Northern Ireland, a 3 per cent share in Scotland and a 1.3 per cent share in London.
In Ireland, Bulmers outperformed the long alcoholic drinks market, growing at 6 per cent compared to 2 per cent growth in the overall market. It now boasts market share of 10 per cent.
C&C's other divisions performed less well. Sales in its international spirits and liqueurs division rose by a modest 1.6 per cent to €68.8 million, although operating profit was up by nearly 6 per cent to €16.3 million.
While Tullamore Dew continued to grow strongly, particularly in its European markets, Carolans was hit by price competition in the UK and turned in a flat performance in its other main market, the US. C&C said it had successfully changed its distribution network from Allied Domecq with no disruption. The soft drinks and snacks division reported a drop of 1.6 per cent in sales to €235 million, while operating profit slid 26 per cent to €17.8 million as difficult market conditions took their toll. C&C aims to stabilise the division by appointing a new head and outsourcing its snack production.
It is also reviewing its Tayto business. C&C chief executive Maurice Pratt declined to be drawn on reports that C&C had received three bids for Tayto.
C&C, which reduced net debt by €58 million to €383 million, plans capital expenditure of €50 million this year in cider capacity. A new bottling facility is expected to come on stream at the end of this month.
