C&C, the Irish drinks company behind Magners cider, has warned that its annual profits will fall short of market expectations, citing a slump in revenues driven by the UK supermarket price war. The company reported that operating profit for the year ending next month is expected to be around €115m (£89m), down from €127m the previous year and €10m below analyst forecasts.
In England and Wales, cider sales volumes dropped 9.8% in the three months to the end of November, with net revenue falling 18.2%. The trend continued into December, prompting C&C to announce plans for significant cost reductions at its English and Welsh operations. The company attributed the decline to intensified competition among retailers and brand owners in the off-trade channel.
C&C stated: 'In England and Wales, pressure on pricing increased in the off-trade channel, reflecting intensifying competition at both retail and brand owner points in the supply chain. C&C is advancing plans to significantly reduce costs, which will return the cider business to acceptable levels of profitability, expand margins and increase investment behind the brand portfolio.'
The company also noted that trading over the Christmas period was below expectations in domestic markets, with volume trends consistent with the third quarter. Sales volumes fell 3.4% in Ireland and 2.4% in Scotland during the three months to November. C&C had previously warned in late October about difficult trading conditions in England and Wales, as supermarkets battled discounters like Aldi and Lidl, and oversupply from new brands pressured prices.
Following a failed bid to acquire UK pubs group Spirit in October, C&C announced it would use its strong cash flow to initiate a share buyback programme.
