UPDATE 2-C&C cautious on Magners cider sales, eyes weather

(Adds CEO, analyst comments)

By Andras Gergely

DUBLIN, May 9 (Reuters) - C&C Group (GCC.I: Quote, Profile, Research, Stock Buzz) (GCC.L: Quote, Profile, Research, Stock Buzz) is struggling to improve sales of Magners cider in the UK after poor weather and low consumer confidence caused a 41 percent drop in 2007/08 earnings, and hit trade this spring.

C&C, which also makes Irish Mist liqueur, said cider sales in Britain would return to growth in 2008 if summer weather was better than last year.

"We are being sensibly cautious in terms of outlook for performance this year, particularly so because of the fragile state of consumer confidence," Chief Executive Maurice Pratt told reporters.

Adjusted basic earnings per share (EPS) for the 12 months to the end of February fell to 32.2 cents, compared with the 29.7 cent average of 14 analysts' forecasts on Reuters Estimates for EPS before exceptional items.

C&C, which has repeatedly warned wet weather last summer and weak Christmas sales would hit full-year earnings, said Magners volume fell 15 percent in 2007/08, while volume for its Irish cider brand Bulmers dropped 4 percent. Revenue fell 8.1 percent to 679 million euros ($1.04 billion).

It expects revenue growth from the second quarter as it launches marketing initiatives such as the introduction of Magners Draught in Britain, and due to last year's low base.

"For the full year, the group expects modest overall revenue growth and some improvement in operating margins," it said, adding foreign exchange hedging would substantially insulate it from the weaker sterling versus the euro.