Drinks group C&C plans to spend up to €70 million on a new warehouse in Clonmel to cope with the rapid growth of its Magners cider product.
The group has already concluded a €200 million investment in its 100-acre Tipperary facility to increase its cider-making capacity to 500 million litres, more than double the current output of Bulmers and Magners.
It is now seeking planning permission to build a warehouse on the site to handle about 128,000 pallets of cider annually. This move has also been prompted by a significant rise in the cost of leasing warehousing from third parties.
Details of the investment were released by the company along with a strong set of financial results.
C&C chief executive Maurice Pratt also announced plans for a €150 million share buyback scheme that will see the group acquire about 4 per cent of its own stock.
The group's operating profit for the year to February grew by 77 per cent to €212 million while its revenues rose by 27 per cent to €981.4 million. Net debt declined by €78 million to €305 million.
This strong performance was driven by substantial growth in sales of Magners cider in the UK, which outsold Bulmers for the first time in C&C's history.
Sales of Magners rose by 262 per cent to €318 million last year from €87.8 million in the previous year. By contrast, Bulmers achieved sales in the Republic of €199.7 million last year, a rise of 5 per cent on the previous 12 months.
Magners was expanded last year from its test markets in Scotland and London to other parts of the UK. Magners now has a 1.7 per cent share of the long alcoholics drink (LAD) pub market. C&C said it hopes to increase this share to 2.3 per cent in the current year.
C&C recently expanded Magners into Barcelona and Munich and will spend €12 million testing the product in these cities. Mr Pratt said there was a "degree of risk in terms of the success of these markets".
"It will be October before we can elucidate in any definitive way on the results in these markets," Mr Pratt added.
Bulmers continues to perform well. The company said it shares of the LAD on-trade sector has risen by 50 basis points to 10.5 per cent.
C&C's spirits and liqueurs business performed strongly last year. Revenue in this division, which includes Tullamore Dew whiskey and Carolans cream liqueur, saw its operating profit rise by 6.6 per cent to €17.7 million.
The soft drinks division suffered a decline in revenues of €2.3 million during the year to €185.2 million, due to the loss of a contract with Danone and a small reduction in the sales of fizzy drinks.
The Ballygowan water brand and energy drinks performed well during the period.
