By Conor Humphries
DUBLIN (Reuters) - Irish cider maker C&C (I:GCC) is trying to build a profitable niche position in England and invest heavily to recoup lost market share in the United States after those markets dragged group profits down by 9 percent, management said on Wednesday.
The maker of Magners and Bulmers cider ruled out closing down or selling its business in England and Wales, where profits fell 38 percent in the year to February following an increase in competition.
C&C reported a profit of 115 million euros (83 million pounds) in its financial year to February, in line with guidance issued in January.
There was a marked divergence between its core Irish and Scottish markets, where operating profit was up by almost 2 percent, and England and Wales where it has faced a number of new rivals in the cider market, including Swedish brand Kopparberg and AB InBev's (BR:ABI) Stella Cidre.
In England, C&C plans to cut infrastructure costs and focus heavily on its premium Magners brand, Chief Executive Stephen Glancey told Reuters.
"What we are doing right now is focusing the business on a much smaller niche position behind the Magners brand" after the company made the "wrong decision" by investing heavily in sales and marketing as the market became more price focused, Glancey said.
But he said it would retain the English business in part because London is such a key platform for building an international brand.
C&C also reported a sharp fall in profits in its small North American division, where operating profit fell to 1.5 million euros from 11 million as volumes fell 18 percent.
As a result it said it was to write down 150 million euros from the value of its U.S business, a move analysts said had already been priced in.
But Chief Financial Officer Kenneth Neison said the fall in profitability was caused in part by high investment of 27 percent of sales in sales and marketing and that C&C hoped to fully reverse the fall.
"We have been doing the right things in terms of positioning the business for the long term," Neison said.
The company also announced plans to increase dividend pay-outs to 50 percent over time from just over 40 percent today.
C&C shares opened up 4 percent at 3.60 euros and traded 1 percent higher at 3.51 euros by 0820 GMT.