Stiff competition among cider fermenters has made life difficult for producers supplying one of the few growth markets in the drinks sector. Merrydown lost pounds 2.8m last year, after making a profit of pounds 1.7m the year before.
It has also slashed its dividend payment by nearly a third and shareholders will receive a final dividend of 1.5p, making 2.5p in total. Merrydown paid 7p last time.
The company was pushed into the red by exceptional items as it wrote off pounds 1.6m on assets and a further pounds 600,000 on restructuring. It said the reorganisation, which included making 60 of its 200-strong workforce redundant, would save pounds 1.5m a year.
The Sussex-based cider maker made operating profits of pounds 900,000 but the chairman, Richard Purdey, admitted that the cider fermenting business lost money.
'It is true to say that the newly acquired businesses saved our bacon,' he said.
In December 1992, Merrydown bought two adult soft drink brands from SmithKline Beecham, the pharmaceutical group, paying pounds 8m for Schloer and PLJ.
The acquisition and expenditure on repackaging and advertising its cider brands meant that borrowings stood at pounds 11m at the year-end, equivalent to gearing of 88 per cent.
Stephen Burke, the new finance director, said he hoped to see gearing fall towards 50 per cent in the current year and remain below that level in the long term.
Mr Burke replaced Michael O'Driscoll, who resigned in March after 11 years with the company. Mr Purdey said his departure allowed the company to update its financial reporting procedures. One analyst said yesterday he thought Mr O'Driscoll had been made a scapegoat for the recent problems at the group.
The loss per share was 22.8p compared to earnings per share last time of 13p.
Shares closed down 2p at 130p.
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