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C&C Group halt Magners sales decline

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The Irish drinks group C&C  has halted the long-running decline in its cider sales, with sunny weather generating better than expected volumes and helping it to improve its outlook for future earnings.

Shares in the makers of Magners cider rose 2.1 percent, bucking a flat general index, after it said 2009-10 operating profit should be at the top end of its previously guided range of between 77-82 million euros (66.6-70.9 million pounds).

At 2.43 euros, the shares still remained well below a peak of 14 euros reached in early 2007, after which C&C started to battle a rapidly deteriorating economy, repeated poor summer weather and tougher competition.

C&C said revenue in the first four months of its fiscal year, which began in March, rose 3 percent on a constant currency basis.

Volumes for cider, which it has traditionally marketed as a hot weather beverage to be drunk over ice, were flat year-on-year, ahead of the company’s projections, as sunnier weather boosted demand.

A strengthening of the value of sterling will also help profits, the company said.

“Investors will be quite happy with the update,” one Dublin-based trader said. “Everything seems to be ahead of expectations.”

In Ireland, where C&C sells cider under the Bulmers brand, volumes rose 4 percent, in contrast to a 4 percent drop in Britain which C&C said was still better than planned.

“The launch of Magners Pear has been strong,” it said of its heavily-marketed new drink.

C&C, which also makes Tullamore Dew Irish whiskey, said it expected operating profit at its spirits and liqueurs business to decline by as much as a third in 2009-10. “The group does not expect any near-term improvement in trading within this division,” it said.

C&C’s new management team, recruited in November from brewer Scottish & Newcastle, started off in March by writing down assets worth 141 million euros to streamline the business in the face of falling sales.

“Following four months of encouraging trading in the cider division, the group now has a greater degree of visibility in and confidence about its plans for the current financial year,” it said.

(Reporting by Andras Gergely; Editing by Dan Lalor and David Cowell)

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Friday, November 24, 10:28 pm

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