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Goodbody: Volume Declines Expected For C&C Group

C&C Group is expected to post sales of around €701 million, as well as an Earnings per Share decline of 6% for FY 2015, according to Goodbody Stockbrokers.

EBIT is expected to be in the region of €115.4 million. The Bulmers parent will post its annual results for the year to February 2015 on Wednesday morning.

According to Goodbody, the cider maker is expected to post volume declines of 3.2% in its Irish business (excluding Gleesons), 9.5% in its England and Wales cider business, 1.8% in Scotland, and 19.1% in the US.

However, C&C is anticipated to post profit growth of 1% in Ireland, thanks largely to the successful integration of the Gleeson Group operations.

Ireland and Scotland now account for ’85% of Group profit,’ Goodbody noted, adding that ‘these regions continue to benefit from the integration of acquisitions. However, more difficult conditions emerged in H215, with Irish cider volumes suffering from poor summer weather (and more recently increased competition) and Tennents in Scotland down due to new drink driving legislation.’

Looking ahead to the group's next financial year, Goodbody said that ‘increased competition could be another issue in FY16, as Heineken has recently launched its first Irish cider brand, Orchard Thieves. Available in both the on and off-trade, the company has reportedly earmarked €20m to market the product (we estimate C&C currently spend a similar amount).

‘With a c.75% market share in Ireland currently, Bulmers is the clear and dominant cider brand in Ireland. The introduction of this new brand and a significant marketing budget could see C&C cede some of its share in FY16 though the company has increased its A&P spend this year (additional €3-€4m or 15-20% earmarked for Ireland/Scotland) which should offset some of the negative impact.’

© 2015 - Checkout Magazine by Stephen Wynne-Jones

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