C&c Share Discussion Threads

[r0cksteady] 07/8/2007 09:41

What are opinions on the S&N result? With C&C up - was the market expecting worse news?

[lbo] 07/8/2007 09:32

Weather challenge for Scottish & Newcastle
Tuesday, 7 August 2007 08:09
Britain's Scottish & Newcastle has become the latest company to be affected by the bad weather in northern Europe this summer.

The brewer said hitting its trading targets for the year would be very challenging, blaming underperformance in its western European markets.

S&N, which is the biggest brewer in Britain, France and Russia, posted a less than expected 5.5% rise in its first-half pre-tax profits to £191m on 7.8% higher revenue of £2.1 billion.

The firm said bad weather in Britain, France and a strike at one of its French breweries had outweighed strong growth from the Russian beer market.

S&N, which owns Strongbow cider and Bulmers in the UK, is a rival of C&C's Magners brand in Britain. It said Strongbow revenues were up 16.4% and that the brand gained market share. The company also said it was testing the potential for cider in European markets, a move which C&C has also announced.

[andrewbatchelor] 07/8/2007 08:11

Expect another profits warning; this will tank much further.

[cat100] 06/8/2007 16:50

an interesting afternoons trading

[bionicdog] 06/8/2007 12:15

I live in London and I must say that I've never visited a pub that doesn't stock Magners , just one that only had it in small approx half pint bottles.
And I do go to the pub an awful lot.

[itansey] 05/8/2007 21:16

The weather was very hot in London in this weekend. I have to say that there are a lot more people drinking Bulmers than Magners. The availability of Bulmers over Magners is the key to C&C's growth. If the pubs don't stock Magners we're in trouble i'm afraid.

[lbo] 05/8/2007 11:57

Boardroom: C&C develops British rivalry

[itansey] 05/8/2007 11:47

C&C rivals circle the flagons

05 August 2007 Sunday Business Post

Maurice Pratt's firm has warned profits will slump, with the wet summer causing a fall-off in Bulmers sales and rivals Scottish & Newcastle aggressively pricing cider.

The C&C story took another twist last week with a second unexpected profit warning, as bad weather continues to dampen the company's growth prospects.

The Bulmers/Magners growth trajectory has been well and truly interrupted now -in July, total cider sales fell 30 per cent in Britain and 15 per cent in the Republic.

The two profit warnings have left some in the market feeling unhappy with C&C's handling of the sales slump.

One Dublin analyst commented that while chief executive Maurice Pratt has been praised for his marketing skills, on this occasion ''they have handled it very poorly''.

There is a feeling that the first statement should have given more insights into the potential problems which lay ahead. The analyst said the revised guidance in the earlier note had clearly been optimistic, although the market did not get a sense of this.

''The July 13 statement appears to have pinned too much on July," said one broker.

Another analyst questioned why the company continued to pay up to €8.78 per share as part of its share buyback programme over the past few weeks when it knew sales were falling during the month of July.

While C&C may have ruffled some feathers in the market, most are now trying to get a measure of what lies ahead. Some analysts believe the share price can recover and that the bad summer is a once-off, but others fear competition will be tougher than expected in the British market.

One analyst said 70 per cent of the problem was weather and 30 per cent was the fact that rivals were turning up the heat.

Scottish & Newcastle (S&N) has been aggressively pricing its cider in recent weeks and appear to be hurting C&C.

Said S&N in a recent statement: ''In cider, we have also gained share in a market which has continued to grow strongly despite the poor weather." It is a very different picture than the one being painted by C&C.

''Scottish & Newcastle have woken up to the high profit margin and increased sales potential in cider," said one Dublin drinks industry source.

Another concern is the impact the bad summer will have on the rest of 2007. It is believed that 80 per cent of the company's recruitment is done during the months of June, July and August.

This means new customers normally try the cider during these months and this recruitment carries through to extra sales in the autumn.

Ross McEvoy of Bloxham Stockbrokers said: ''Due to the impact of the extremely poor weather on summer recruitment, the group would not give any guidance for the second half until its interim results on October 10.

''Recruitment in summer months is critical to C&C's model, and it will be very difficult to quantify what effect this will have on second half volumes."

''Management said competition remains intense and are taking a pessimistic view by assuming the same rate of decline in August as in July."

Citigroup also raised the issue of increased competition. The analyst said its estimates for next year assumed some degree of volume recovery, but ''we remain concerned that recent poor trading is due also to competition from Bulmers [The S&N version sold in Britain]".

Liam Igoe of Goodbody Stockbrokers said the model ''may be badly bruised but is not irretrievably broken''. However, he also alluded to the fact that it was difficult to assess the future growth story for the brand.

''In the short term, the shares are unlikely to make headway until there is more visibility on its sustainable market position in Britain."

The plunge in C&C shares has led to further speculation that it might divest itself of its wine distribution business, Findlater Grants.

This would be in line with the company's strategy of selling non-core assets, such as its soft drinks distribution business, so it can concentrate on growing its suffering Magners and Bulmers cider brands.

The company sold Tayto last year and its water and soft drinks business earlier this year to Britvic.

Drinks industry sources said that while the company had been looking for a trade buyer for the wine company, there was little interest in the business in the market. DCC, which owns the Woodford Bourne wine business, considered making a bid for the company for a time.

Once one of the largest wine merchants in the country, Findlater Grants has been suffering in recent years after losing some brands to rival companies and increased competition in a market that has been steadily growing as wine consumption has risen in recent years.

Rival wine distribution companies will be eyeing other strong Findlater Grants brands as its parent company suffers. Revenues at the wine business fell by 15 per cent last year to €199 million, while operating profits dropped by a massive 86 per cent at €700,000.

C&C's focus is clearly not on the wine business. At a briefing earlier this year, one of the company's executives described the distribution operation as ''immaterial'' to C&C's business.

While it is believed to be keen for a sale, the company is also willing to sit tight and wait for the right money.

The company has been happier to continue chasing a high profit margin product and increased sales with Bulmers and Magners, rather than the narrower margins made through distribution and wine.

But C&C's efforts to turn Magners and Bulmers into the Bailey's of the cider business are now floundering and bargain hunters may start circling.

Prior to the recent raft of bad news for the brand, C&C was seen as a takeover target once its share price dipped below €10.The stock is now trading at around €6.20, down from highs of €13.

One analyst commented that an offer could still be on the cards, although shareholders may be unwilling to sell at present levels given that many bought in at a much higher price.

SAB Miller, maker of Pilsner Urquell and Miller Lite, was linked to the company last year and ironically, the drinks giant has enjoyed a sales boom in recent months from the hot weather in eastern Europe and South Africa.

Among the other companies mooted as potential buyers are Molson Coors, In-Bev and Constellation Brands. Pratt said that despite falls in cider sales in July, ''the model is intact''.

However, given the uncertainty over future sales, potential buyers might prefer to watch to see how that model continues to fare in less sunny climes.

[lbo] 05/8/2007 11:45

Could MauricePratt be the new Homer Simpson?
Sunday August 05 2007

C&C boss Maurice Pratt is running the risk of becoming the Homer Simpson of Irish business, with one D'oh! after another for the cider chief.

Pratt sold Ballygowan to British fizzy drink firm Britvic for €250m a couple of months ago. At the time it didn't seem a bad deal at all. But he's chucked it all away, wasting €113m on the worst share buy-back programme of all time.

C&C shares have fallen almost 50 per cent since the buy-back started in June, when they spent an initial €58m buying 5.5m shares at €10.59 each. Since then he's shovelled good money after bad. He even blew almost €5m on shares last Monday ahead of the profits warning.

You'd need to be rattling full of Prozac to see C&C's share price getting back up to €13m again. The money is gone. He might as well have shoved it down the jacks.

Finally someone shouted stop. Bit late, though. Along with a the announcement of a €140m plan to double bottling capacity in Clonmel, ahead of a major fall off in demand for Bulmers and Magners cider, Pratt has issued not one but two serious profits warnings in record time.

At least Homer could always blame Duff beer for his bungling, but teetotaller Pratt doesn't have the same luxury.

[general johnson] 05/8/2007 03:21

It's dropped thru the floor. made a lot of people poor. Respect!

[cat100] 05/8/2007 00:47

Is cider still the apple of our eye as Magners sobers up?
The sector has been drinking beer under the table for growth, but a setback for one of the big players has raised doubts about the strength of the boom. By Tessa Thorniley
Published: 05 August 2007

Cider was being made in Britain before the Romans arrived and at various times it has been so abundant that it was used to pay farm wages and as an alternative to water during baptisms.

Never has cider tasted so sweet, though, as it did recently when it overtook beer as Britons' preferred takeaway from off-licences.

Yet after four years of stellar sales, critics are calling time on the boom as the group credited with rejuvenating cider's image, Ireland's C&C, emitted a financial hiccup.

Cider has swung in and out of fashion. In the early 1990s, Diamond White and Max were all the rage before alcopops elbowed traditional drinks to one side. In the 1960s and 1970s, perry (or pear cider) even enjoyed a stint in the limelight thanks to Babycham.

The industry, however, is adamant that this current renaissance has some way to go. As evidence, it points to the aggressive battle being fought by some of the UK's biggest drinks firms for supremacy in the sector. The likes of C&C, Scottish & Newcastle and Constellation Europe have spent tens of millions on cider adverts in the past few years.

What remains to be seen is whether that cash is going down the drain.

When C&C launched Magners Original in 1999, cider was in urgent need of a makeover. Back then, it was viewed as a drink for people on park benches or teenagers getting their first alcoholic kicks.

By lowering the alcohol content, putting the drink in a trendy bottle, serving it "over ice" and launching a £30m advertising campaign, C&C started to make cider cool again. In 2005, a year after the company floated, sales increased by 350 per cent. In 2006, they grew by 225 per cent. Rivals quickly latched on to the potential of cider and the sector swung into boom, showing 26 per cent volume growth in the year to July 2007 against broadly flat beer sales, according to research firm AC Nielsen. We are now drinking more than one billion pints of cider a year.

Yet in the midst of all this, C&C has issued two profit warnings in just over two weeks, while its shares have fallen by almost 20 per cent.

Maurice Pratt, C&C's chief executive, blames the wet summer, as well as stiff competition, for a 30 per cent fall in volume over July. Operating profits are expected to be 35 per cent lower than last year and analysts say there is "no visibility" going forward.

Paul Walsh, the chief executive of drinks giant Diageo, said recently that the cider market was "pretty crowded and we don't see it having a lot of legs outside the UK." He added: "It's not clear to me that the cider trend is long-term trend."

Part of C&C's problem is that Magners has fallen victim to its own success. The over-ice concept – beautiful in its simplicity – also proved easy for competitors to copy. Scottish & Newcastle introduced an over-ice Strongbow drink, called Sirrus, and then brought Bulmers Original on to the market in direct competition with Magners. In a strange twist, Magners brews Bulmers in Ireland but the drink has no links with S&N's product.

Then, Constellation launched Gaymers Original in the over-ice category last year. Between 2005 and 2006, the three brands poured around £80m into cider advertising.

The boom has been hailed a success for British business at a time when consumers are concerned about provenance. The drink is perceived as healthier than beer and it clocks up considerably fewer food miles.

John Mills, the managing director of Gaymers, says: "All our apples come from long-term contracts of around 30 years with the orchards, mainly in Somerset. It means apple farmers can get on and plant the trees knowing they have a buyer."

S&N delivers interim results on Tuesday and all eyes will be on the extent to which weather has hit cold, or over-ice sales.

John Hutson, the chief executive of JD Wetherspoon, says there's little sign of a cider dip at his pub chain. "We stock Magners, Bulmers and perry brands. Over the two years, demand is up over 50 per cent. I think C&C is feeling the pressure as everyone joins in. It's not the end of a boom."

A competitor to C&C says S&N has been aggressively discounting Bulmers Original to the trade. "It is cheaper than Magners and it has hit C&C's trading. S&N is a massive machine to take on. It has some serious sales clout." Mr Pratt has said firmly he has no plans to drop the price of Magners in response.

City analysts maintain that Magners has a strong brand and will bounce back to some extent, although jitters remain about the robustness of the cider revolution. Andy Blain at investment bank Shore Capital says new products and brand extensions such as Iced and Light versions of Magners are expected, but he adds that the "momentum of the booming market has been lost".

Simon Mosey, the marketing manager for cider at S&N, says there is more to be done as the sector still accounts for only 8 per cent of total alcoholic drinks by volume.

If celebrity drinkers are any indication of future trends, a Babycham revival may not be out of the question. On the back of the cider boom, perry has been converting drinkers.

Pop princess Lily Allen put in a request for a crate when she performed at Glastonbury, and the Duchess of Cornwall was reportedly so taken by perry at a recent function that she insisted the Prince of Wales try the tipple.

Research firm Euromonitor says perry sales will rise by around 5 per cent between 2006 and 2011. Meanwhile, Tesco is selling around 3,000 cases a week, against 100 a year ago. Look forward to a Babycham revival at a bar near you.

[lbo] 04/8/2007 11:11

Clonmel residents told to boil their drinking water

About 4,500 households in Clonmel, Co Tipperary are to receive hand-delivered notices this morning warning them to boil all drinking water, writes John Downes .

An emergency meeting of Clonmel Borough Council last night discussed the results of Health Service Executive water samples which revealed elevated levels of the cryptosporidium parasite in the Glenary water supply that serves much of the town.

It is believed that the source of the contamination may be sheep and wild animal droppings which entered the water supply following recent heavy rains. A statement from the Environmental Protection Agency said the Clonmel drinking water plant served a population of 11,500 people.

Speaking after the council meeting, the mayor of Clonmel, Cllr Richie Molloy, said the decision had been taken to issue the "boil water" notice as a precautionary measure.

The warning is expected to remain in place for a minimum of six weeks, as works to upgrade the Glenary treatment plant are expected to take four to five weeks to complete. No cases of illness connected with the presence of the parasite in Clonmel's water supply have been reported.

People with impaired immune systems, young children and the elderly are more susceptible to the parasite, which can lead infected patients to develop diarrhoea, stomach cramps, fatigue, vomiting and low grade fever.

Galway city has had a "boil water" alert in place since mid-March in response to the detection of unseasonably high levels of the cryptosporidium parasite. Of 238 reported cases, just under 50 had to go to hospital.

Two years ago, Ennis's local water supply was hit by a series of boil notices after cryptosporidium was found in the water supply in June 2005. A partial precautionary boil notice remains in place for vulnerable members of the community.

Clonmel households and businesses will have to boil all drinking water, including water used in the preparation of salads and similar foods which are not cooked prior to eating.

A spokesman for the Minister for the Environment, John Gormley, said he had been informed of the situation in Clonmel. While the introduction of a "boil water" notice in any area was unfortunate, it was preferable that it be introduced at an early stage, the Minister said.

[eoc74] 03/8/2007 07:11

Exactly Rocksteady, no RNS today either showing no buyback for the moment. Down the road, the prospects of this will depend on 2 things in my opinion. Is Magners a fad in the UK and if so, will they be able to grow sales elsewhere to make up for it. Hopefully sales will recover somewhat this month.

[itansey] 02/8/2007 19:52

Suprised with the bounce today, i don't think it'll last to be honest..

[r0cksteady] 02/8/2007 08:33

FYI:

Share buyback is suspended

Wednesday August 01 2007

C&C has cancelled its share buyback programme following the collapse of its shares after the company issued its second profit warning in less than three weeks.

Maurice Pratt, chief executive of the company, confirmed yesterday that the scheme would be dropped in the "short term".

"We have suspended the programme until the share price stabilises."

He said the company is now €115m through a €150m share buyback scheme.

"We have instructed our brokers to withdraw from the market," he said yesterday.

It is understood that C&C is planning a further €150m share buyback scheme once it has completed the sale of its soft drinks business to Britvic.

That deal is currently before The Competition Authority and C&C is expecting some news from the regulatory body on the deal in August.

[eoc74] 02/8/2007 07:05

Where was the rns yesterday then? I read an article that quoted him as saying the opposite! By the way, theyre shedding jobs.

C&C to shed 70 jobs over fall in sales of Magners

Cider maker C&C plans to cut up to 70 permanent jobs from its production plant in Clonmel, Co Tipperary as a response to the downturn in sales of its Magners brand in Britain.

Staff and unions at the plant were informed of the move on Tuesday, the day that C&C issued its second profit warning in three weeks.

C&C employs about 650 staff at the plant, the majority of whom are members of Siptu. The company said that it would issue four weeks' notice of its plan to implement the redundancies by early next week.

The job cuts will take effect in early September.

Siptu declined to comment on the move, but it is understood that a meeting between the union and management has been scheduled for next Wednesday.

C&C said the redundancies are necessary due to "high stock" levels and a "downturn in sales". It declined to comment on the possible cost savings involved with the job cuts.

The company said it hoped the layoffs would be "temporary" and that staff could be rehired if the market turns around.

C&C has recruited 190 staff at the production facility over the past 12 months as capacity was expanded.

In May, C&C outlined plans to spend up to €70 million on a new warehouse in Clonmel to cope with the rapid growth of Magners in the UK.

The group has already concluded a €200 million investment in its 100-acre Tipperary facility to increase its cider-making capacity to 500 million litres, more than double the current output of Bulmers (its cider brand in Ireland) and Magners.

On Tuesday, C&C said its profits for the six months to the end of August 31st could be 35 per cent below the same period of 2006. This would result in a €40 million hit to its profits in the current six-month period.

C&C said sales of Magners deteriorated at an unexpected rate in the second half of July due to poor weather in Britain and increased competition.

C&C's share price declined by 27 per cent, or €2.23, on Tuesday to close at €6. The stock regained 25 cent yesterday in Dublin yesterday.

[djderry] 02/8/2007 01:26

According to Maurice Pratt,the co. is to continue its buy-back programme.I tend to believe him.(See yesterday's Irish Times).

[eoc74] 01/8/2007 22:43

dj-they are not continuing the buyback at the moment. It has been suspended until the share price settles down, and rightly so.

[general johnson] 01/8/2007 22:11

If your mates drink it, I reckon that should put the share price at around £2. Here's hoping!

Cheers!!

[cottlet] 01/8/2007 21:53

My boys think that Magners are the mutts. They drink it and so do their friends. But does that have any bearing on the share price?

[djderry] 01/8/2007 19:22

The co. intends to continue with the buy-back programme and rightly so.

[eoc74] 01/8/2007 18:15

6.4m sells and 4.4m buys and its up 38c?? Fools gold? Or is there a buyer there somewhere. Im baffled! Thought it would sink today.