Shares in HP Bulmer slid 7.5 per cent yesterday after the troubled cider maker was forced to reveal that its profits would be below its revised expectations because of a change to its accounting procedures.
The company, which has issued two profit warnings in the past six months because of poor trading overseas, also announced a management shake-up that saw its international director fall on his sword.
It blamed the slide in its share price on the market's sensitivity in the wake of recent American accounting scandals and insisted that there was no hidden agenda in the timing of the announcement, which came ahead of its full-year results on Monday.
"Everyone is very sensitive as to disclosure. Thanks WorldCom, thanks Enron." Mike Hughes, the chief executive, said. Bulmer's shares fell 25p to 307.5p.
Bulmer, which makes Strongbow and Woodpecker cider, said it would report profits before tax, goodwill and exceptionals of £21.4m, missing market forecasts of £22m to £24m, because it was treating a £1.9m gain as an exceptional item instead of including it in the profit and loss account, as it has previously.
The gain related to a provision taken for missing kegs, which are used to transport Bulmer's cider to pubs. More kegs – which typically cost £35 to £70 each – go missing when pubs frequently switch suppliers, Mr Hughes said. "Because competitive pressure against us has abated in the past two years, we haven't lost as many kegs. We treated [the £1.9m] as an exceptional item because of the overall sensitive background and the size of it." The gain compared with a £450,000 profit the year before.
In an effort to get a handle on a difficult year that has seen Bulmer axe its staff numbers by 10 per cent to cut costs, fail to withstand the onslaught of ready-to-drink (RTD) products such as Smirnoff Ice in the US and Australia and misjudge demand for its new, more expensive glass bottles, the company said it was restructuring its executive board.
The changes will see Mr Hughes take responsibility for UK operations from Tim Furse, who will replace John Harvey as international director. Further details will be revealed on Monday, when Bulmer will announce the result of a strategic review of its international operations. "It's not about giving up the ghost internationally, not at all but we have had to adjust our strategy, particularly because of tidal wave of RTD products that is sweeping everywhere," Mr Hughes said. Bulmer will take an exceptional charge of £12.4m, which will include the restructuring costs.
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