Prices and interest squeeze profits at Merrydown

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PROFITS at Merrydown fell last year as the Sussex-based cider maker faced a squeeze on prices and a higher interest bill.

Trading profits in the year to 31 March were static at pounds 2.3m but margins suffered as turnover rose. Merrydown made 12.1 per cent on sales in 1993 compared with 13.5 per cent in 1992.

The company said heightened price-consciousness among shoppers forced it into discounting.

Pre-tax profits were pounds 1.7m, down from pounds 1.9m, with most of the difference accounted for by additional interest payments.

The company's borrowings have risen after it paid pounds 8m for Shloer, the fruit-flavoured soft drink brand in December 1992. Total debt at the year-end was pounds 5.3m, up from pounds 4.7m, with gearing rising to 38 per cent. The company also issued shares to pay for Shloer.

It was the second successive year that Merrydown reported falling profits, at a time when the two largest cider players, Taunton Cider and HP Bulmer, both recorded strong increases. Both have benefited from rising demand for the apple-based drink.

Merrydown's earnings per share also fell for the second year running. Last year it was 13p, compared with 15.2p. Dividends, however, have steadily increased and the company is paying a total of 7p for last year, up from 6.2p.

The stock market was disappointed by the results and Merrydown shares fell 16p to close at 268p yesterday.