operations REVIEW REPUBLIC OF IRELAND (ROI)

C&C Chairman

ROI

Constant Currency(i)

FY2013

FY2012

Change

€m

€m

%

Revenue

133.8

142.5

(6.1%)

Net revenue

92.2

101.4

(9.1%)

- Price /mix impact

(8.0%)

- Volume impact

(1.1%)

Operating profit

38.5

43.7

(11.9%)

Operating margin (Net revenue)

41.8%

43.1%

(1.3ppts)

Volume – (kHL)

615

622

(1.1%)

bulmers & gaymers bottles

LAD category(ii): Retail sales volume of Long Alcohol Drinks (LAD) in ROI declined by 2% in the 12 month period to the end of February 2013. The trend in overall consumption remains reasonably predictable, within the range of level to minus 2% over the last few years. However, there has been a notable slowing of volume shift from the on-trade to the off-trade. In the 12 months to the end of February 2013, LAD volume in the on-trade declined by 3% whilst the off-trade declined by 1%. The 2ppt differential represents a significant narrowing of the gap in channel performance. In the three months to April, the on-trade outperformed the off-trade when measured by sales trend, despite on-trade wholesale price increases on the market leading brands for the first time in several years.

Over the 12 months to January 2013, the growth in cider total volume sales outperformed the growth in beer total volume sales, with growth of 1% achieved. The channel of trade differential is more marked for cider with a strong performance in off-trade (volume +6%) in part attributable to expansion of the value category.

Total ROI: Following on from first half financials dominated by poor summer weather and its impact on cider consumption, trading stabilised in the second half of the financial year. LAD volume in ROI for the Group was up 1.5% in the second half compared with a decline of 3.2% in the first half. At the same time, rate of price/mix deflation improved from 9.1% in the first half to 6.2% in the second. In a market down 2% in the 12 months to January 2013, the Group picked up some modest volume share growth.

Net revenue for the full year declined 9.1%. The relative growth of beer within the portfolio has had a small impact on average revenues. However the price mix deflation of 8.0% is split fairly evenly between the effects of channel weighting of cider volume sales and price promotional activity to support the portfolio in the off-trade.

Operating profit(i) declined 11.9% to €38.5 million with margin down 1.3ppts to 41.8%. In the second half, operating profit was stable year-on-year.

Cider ROI: Net revenue was down 10.8% in the year with volume accounting for 3.2% of the decline and price/mix a further 7.6%. Over half of the price mix deflation was attributable to channel weighting with Bulmers enjoying good market share growth in the off-trade. Pricing in the on-trade was level for Bulmers. In the off-trade, promotional activity and the growth of our value cider brands reduced average pricing, albeit by a lower amount than in previous years.

The brand health of Bulmers remains strong. Effective advertising campaigns and sponsorship events during the year helped keep the brand vibrant and front of mind for consumers. In FY2014, a fresh TV campaign has just been launched for Bulmers.

Beer ROI: The Group’s beer portfolio continued to perform well in ROI with volume growing 11.1% in a beer market(ii) that declined by 2% in the same period. Volume of C&C ‘owned’ brands, Tennent’s Lager and Caledonia Smooth, grew 25.6%. Beer now represents 16.3% of the portfolio volume in ROI.

(i) On a constant currency basis, constant currency calculation is set out on this page

(ii) Per Nielsen data

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