Dublin, July 11 - Irish drinks group C&C said it faced a bigger than expected drop in cider demand this year as wet weather and a dim economic outlook in Ireland and the UK curbed drinkers' thirsts, sending its shares to a new low.
Shares in C&C, the makers of Magners cider sold in the UK, have lost 80 percent of their value since early 2007 as an unusually wet summer last year had already reduced demand for the drink, which is popular at outdoor parties.
"It's tough out there," Chairman Tony O'Brien told shareholders at the company's annual meeting on Friday.
"We now (have) all the deteriorating elements, the weather and now the economy against us as well," he said.
C&C, which also sells Bulmers cider in Ireland and makes Irish Mist liqueur, said cider revenue dropped 10 percent in the four months to the end of June 2008, though sales of its spirits and liqueurs grew by 3 percent.
Its shares traded 16.2 percent lower by 1442 GMT at 2.28 euros, underperforming a 4.5 percent drop on the wider Irish market. It shares were down 16.8 percent in London.
C&C said group revenue fell 8 percent in March-June compared with a year ago and it was unlikely to match 2007 in the half year to Aug. 31.
C&C said cost cutting had helped improve margins, which would at least offset the impact of declining sales on operating profit in the company's first-half period.
DRAUGHT CIDER
Chief Executive Maurice Pratt said C&C had not changed its full-year guidance, but faced tougher conditions than it did when it made a forecast in May. It then predicted mid-single digit percentage revenue growth for its 2008/09 financial year.
"It is clear in an Irish context the reduction in consumer expenditure has occured at a far more rapid pace than anybody would had anticipated or indeed that anybody has seen in such a short pace of time in the last two decades," Pratt told reporters after the shareholders' meeting.
Davy analyst John O'Reilly said the second half of the year could prove particularly challenging for the group, even compared with the low base of 2007.
"There has to be some concern that current weather conditions, a fierce pressure on trade (especially in the UK) and disimproving economic conditions, will slow momentum compared to what might previously have been expected," O'Reilly said in a research note.
C&C said it was trying to diversify its product base in the UK in a bid to rely less on bottled cider whose demand is seasonally sensitive.
"Magners Draught was launched in May and after a slow start, due to initial equipment supply difficulties, is now progressing well," C&C said.