Drink and snacks group C&C posted modest gains in turnover and operating profits last year despite the introduction of the smoking ban.

The producer of Bulmers cider, Tayto crisps and Ballygowan mineral water reported a 3.5 per cent increase in operating profit to €115 million while turnover was up by 4 per cent to €750 million. The group reported adjusted earnings per share of 26.4 cent, in line with market expectations.

However, C&C said profits in its main alcohol division are likely to be flat this year as it invests heavily in the rollout of Magners, its international cider brand, in the greater London area following its launch there in early March.

C&C said it is targeting the second half of next year for Magners to break even in the southeast of England so it will be the year ending February 2008 before the impact is felt in the company's accounts.

Meanwhile, Magners performed strongly in the year ended in February, recording volume growth of 61 per cent and accounting for half of the profit increase in the group's cider division. Overall, the division posted a 12 per cent increase in operating profit to €66.4 million as Bulmers also managed to increase its share of the Irish long alcoholic drinks market, despite a 1 per cent decline in the overall market.

However, the difficult trading conditions in the pub sector took their toll on the company's distribution business which saw operating profit decline by 20 per cent to €6 million.

C&C's international spirits and liqueur business reported a 4 per cent increase in operating profit to €17.6 million as its Tullamore Dew whiskey brand performed well although Carolans, its Irish cream liqueur, faced tougher conditions in the UK and US markets. C&C's soft drinks and snacks division saw profits fall by nearly 9 per cent to €25 million as its carbonated soft drinks business suffered while the snacks market was flat.

C&C, which cut its net debt by €40 million to €441 million,announced a final dividend of 7.5 cent, bringing its full-year dividend to 13 cent per share.

On the subject of the current bid for Allied Domecq by Pernod Ricard, C&C conceded that any change in ownership could have a short-term disruptive impact as it may be forced to put new distribution arrangements in place.

"The scale of the change depends on who emerges as the eventual owner," C&C chief executive Maurice Pratt said.