C&C Group warns profits set to fall 35 per cent

Shares in C&C Group were down 24 per cent today after it warned its operating profits for the first half of its current financial year would be down by more than a third.

The group, which owns the Magners cider brand in the UK, had earlier this month said it expected operating profits for the year to February 28 2008 to "match last year, including a decline in operating profit for the six months ended August 31 2007".

Today it announced that "bad weather and increased competition in the UK" meant that profits for the six months to August 31 2007 would be down by 35 per cent. Magners has come under intense pressure from the likes of rival cider brands such as Bulmer's Original, which is owned by Scottish & Newcastle.

In a statement C&C said: "Trading performance deteriorated at an unexpected rate during the second half of July and C&C's cider sales volumes for the month declined significantly on the same period last year.

"This weak performance primarily reflects the sustained period of extremely poor weather in Great Britain and Ireland and also increased competition in Great Britain.

"Taking into account the low rate of sale in July and the anticipated knock-on effect into August, the Group has reduced its view of the half-year outcome.

"Accordingly the Group would expect that in the half year to 31 August 2007 operating profit outcome will be down by around 35 per cent on the prior year. The scale of the decline reflects weak cider volumes combined with substantially higher manufacturing and marketing costs."

The impact of the extremely poor weather on summer recruitment, together with increased competition, "leaves a degree of uncertainty in respect of the outlook for the second half year for the cider division", the group added.

"During the second half the group plans to maintain its marketing investment programme while reducing costs in other areas," it added.

This afternoon C&C's shares were trading at €6.20 (£4.08), down €1.96 (£1.29).

C&C announces its half year results on October 10 2007.