Sales drop hits cider shares: Merrydown warning prompts analysts to slash profit forecasts

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The Independent Online
A WARNING that Christmas sales had been very disappointing rocked Merrydown Cider's shares and undermined prices of its two quoted rivals, Taunton Cider and HP Bulmer.

Jobs may go among Merrydown's 200-strong workforce. 'If needs must when the devil drives, then we will have to make economies,' Richard Purdey, chairman, warned.

He said: 'Cider sales have fallen well short of expectations in the cash-and-carry and wholesale sectors as a result of an increasing number of economy cider brands.'

Merrydown shares plunged 73p to 140p on the news, and closed at 159p - the lowest level for almost eight years. Taunton, which delivered its own shock to the market in December, fell 7p to 162p and Bulmer retreated 5p to 449p.

Yesterday's warning drew low- key responses from Bulmer and Taunton, and prompted drinks analysts to cut drastically their profit forecasts for Merrydown by nearly 90 per cent.

Gray Olliver, strategic services director at Bulmer, said Christmas sales were reasonable, while Nick Pearch, finance director of Taunton, said the period had been average.

Analysts, who had been looking for Merrydown to increase profits from pounds 1.7m to pounds 3.1m, now expect the company to make just pounds 400,000 when it reports on the 1993/4 year, which ends next month.

Those forecasts imply Merrydown will lose more than pounds 500,000 in the second half, against a profit of pounds 930,000 in the first six months.

The problem of poor Christmas sales has also been compounded by a low level of restocking by retailers. 'Volume of sales for the full year is likely to be well below previous expectations,' Mr Purdey said.

He said Merrydown would concentrate on its main brands, and PLJ and Shloer, the adult soft drinks which have held sales levels. However, the Martlet Natural foods business, which accounts for nearly 10 per cent of turnover, is up for sale.

(Photograph omitted)