Saturday 1 October 2016

C&C flags operating profit of €103m for 2016

Published 11/03/2016 | 02:30

Bulmers
Bulmers

Shares in C&C surged more than 4pc on Thursday after the cider maker said it expects an operating profit of €103m for its financial year ending February 29.

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That was in line with its previous guidance and provided welcome good news for the firm.

In Ireland C&C lost ground to other new arrivals in the draft market such as Heineken's Orchard Thieves brand.

The Bulmers owner distributes a number of brands under contract. It said distribution of Corona lager in the Republic and Heverlee and Clonmel 1650 in the North improved again this year.

Goodbody analyst Liam Igoe believes the firm's Irish and US operations are under growing pressure.

The company has pressed on with cost reduction plans revealed in October of last year and says the targeted €15m of savings will start to flow in 2017.

Partnerships

C&C believes export of its own brands, which include Tennents lager and Finches soft drinks, should deliver 20pc volume growth in 2016. The firm has agreed distributor partnerships with San Miguel in Thailand and Coca Cola Amatil in New Zealand

However, Mr Igoe argues the distribution deals may not add a lot to the company's earnings.

"I'm not sure the new distribution in Thailand is going to move the needle very much, but if you get a lot of those it may help a bit over time," Mr Igoe said.

The company entered into new sales and marketing arrangements with US-based Pabst Brewing Company. Pabst has agreed a deal with C&C to make it the exclusive distributor for its brands in the UK and Ireland.

"The US has been a problem child for the company for the last couple of years. We don't know how well Pabst will be able to turn around its cider sales.

"It has really not participated in the growth in the US cider market that they correctly predicted three years ago," Mr Igoe said.

C&C also said in the update that 75pc of its €100m share buy back programme announced in October is complete.

The firm reported an uptick in trading in Scotland in spite of tighter drink-driving laws introduced in December 2014. Tennents improved its performance in the second half of the year while Magners had strong fourth quarter retail sales.

Irish Independent

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