Magners loses its fizz as sales slide

Magners producer C&C Group signalled that the cider market had lost some of its fizz when it warned last week that its turnover for the six months to August 31, 2008 would be eight per cent lower than in the same period in 2007.

And poor weather and tough trading conditions meant turnover and operating profits for the full year would come under "continued pressure", the group said.

Nevertheless its first half operating margin was expected to increase by approximately one and a half percentage points during the period, reflecting "the benefits of the group's re-organisation and re-structuring programme which was successfully implemented as of March 2008".

C&C said the combined effect of revenue decline and margin improvement was expected to be a broadly unchanged operating profit for the half year versus the same period in 2007.

Turnover across the group's cider division was expected to be down by approximately 11 per cent compared with the same period last year - broadly in line with sales volume.

Spirits & liqueurs shipments were expected to increase by three per cent over the same period last year.

C&C said its financial performance for the first half, was at the lower end of the guidance given in the interim management statement issued in July.

The expected return to volume growth the UK in the second quarter "did not materialise due to the worsening economic environment, continuing competitive pressure and a slower realisation of the benefits from market initiatives", the group said.

Performance in Ireland has also been hit by the cumulative impact of two consecutive poor summers, it added.

C&C said it expects the current difficult market conditions "to continue throughout the second half of the year, which, notwithstanding the benefit of the roll out of draught Magners in Great Britain, will result in continued pressure on revenue and operating profit".

The group announces it half year results on October 9, 2008.