€200m wiped off C&C shares after weather blamed for sales slump
NEARLY €200m was wiped off the value of drinks firm C&C yesterday after the company admitted profits would be at the lower end of forecasts this year amid deepening problems in its main markets.
In an interim management statement released yesterday, C&C said trading in its core Irish and UK markets were difficult during the first three months of its fiscal year and are expected to remain so for the remainder of the year.
"Volumes were generally weaker in March and April driven by unseasonably cold weather with a relative improvement in May," the company said.
As a result, the business said it expected operating profit for the 2014 financial year to be in the range of €125m to €132m. That would represent annual growth of between 10pc and 16pc but it is towards the lower end of what analysts were forecasting.
The home markets were not the only ones to be hit, however. In the US, volumes at Woodchuck, its main brand in its business across the Atlantic which cost C&C some $300m (€230m) last year, posted a disappointing performance, with volume only growing 3pc year-on-year.
The weak trading statement caps a tumultuous few weeks for C&C, which has been battling numerous bearish reports on its business.
Citibank in particular has been particularly unforgiving on the cider firm, flagging weak volumes in the US for several weeks.
The shares fell 10pc on June 14 after the bank named C&C its "least preferred" stock.
Chief executive Stephen Glancey said he was "pleased to guide towards continued earnings growth for the current financial year".
"We remain focused on developing our multi-beverage capability in core markets and investing in customers through our trade lending model.
"Our Tennent's business has again performed well and provides a degree of balance to a competitive UK cider market.
"We remain confident in the attractive prospects of international cider. While we have not meaningfully participated in the category growth in the US this quarter, our fundamental assumptions about the attractiveness of the cider category in the US and the broader opportunity for our portfolio in international markets remain unchanged.
"We expect to continue to reduce operating costs, deliver earnings growth and to enjoy the benefits of balance sheet strength," he added.
In the three months to the end of May, volumes fell across all of C&C's businesses in Ireland. Volumes were down 11.5pc year-on-year across the board, while net revenues were 13pc lower than this time last year. Worryingly, cider volumes slumped 13pc.
In the UK cider sector, the numbers were even worse. Volumes fell 22.2pc while revenues were off 24pc on the first quarter of its 2013 fiscal year. Across the water, beer sales rose sharply at 12.4pc, but revenue growth was less than half that figure.
Analysts were uniformly disappointed with the numbers, but Shore Capital said the company was still fundamentally sound. It retained a "buy" rating for the stock.
By early afternoon the shares which had dropped more than 11pc, were off 10.3pc. The shares are down 16pc so far this year.