Tennent’s owners C&C warned of a 9.4% fall in annual profits, following poor sales in the period before Christmas.
In a trading report for the three months to November 30 2014, the Irish drinks group forecast operating profits of e115 million (£89.23m) for the financial year ending in February, down from e127m (£98.54m) in the previous year.
The group, whose ciders include Bulmers and Magners and is best known in Scotland for Tennent’s lager and beer brands, said trading conditions in the third quarter were below expectations.
These continued during the Christmas period, prompting the profits warning.
In Ireland, volume of sales was down 3.4% following a solid performance in the first six months, with October and November particularly quiet.
A similar trading profile was evident in Scotland and volume was down 2.4%, excluding the performance by the drinks wholesaler Wallaces.
Cider volume was down 9.8% in England and Wales, with net revenue down 18.2%. C&C is exploring initiatives in both countries to significantly reduce costs to return the cider business to profitability.
In the US where C&C produces Woodchuck and Hornsby’s ciders, volume declined 16.2%, which C&C said was an improvement on the first half but still some way from a return to growth.
The “disruptive impact” of new entrants to the US market had receded, Woodchuck is performing in line with monthly movement and underlying trends provide more confidence of prospects.
Underlying performance in other export markets was strong. Volume in Europe increased 18.6%, with Magners up 7.1% and Tennent’s up 62.1%. Distribution issues in Australia have been resolved and the group anticipated a solid platform there for the next year.
Looking to the future, the group expects its core markets of Ireland and Scotland to continue to deliver resilient performance through strong, brand-led multi-beverage operating models.
In the US significant investment including the opening of a new cidery and focused activity should begin to have a positive impact on performance.
C&C has withdrawn from takeover talks with British pubs group Spirit after a bidding war with Greene King.
Good cash conversion and low leverage provides continued balance sheet strength and flexibility but the group expects to buy back shares within the existing authority granted by shareholders.
Shares in C&C closed down 0.36 yesterday at 3.40.