C&C profits hit by sterling slide, but core volumes rise
The slump in sterling since the UK's June Brexit vote side-swiped Bulmers maker C&C, with its reported operating profit in the first half of its financial year tumbling 12pc to €55.1m. Its revenue fell 14.4pc to €307m, taking account of the currency swing.
But chief executive Stephen Glancey pointed to higher sale volumes of core brands, including Bulmers, Magners and Tennent's.
"The currency impact is a translational one, not transactional," he told the Irish Independent. "There's nothing we can do about it. Everybody who trades in the UK and takes earnings out of the UK has the same issue."
C&C said the sterling decline had hit reported first-half revenues to the tune of €24.4m, and operating profit by €2.8m. It also noted that there had been "some variability in consumer demand" in the period.
Mr Glancey said the group's focus on its core brands was the "right thing to do" for the long-term.
He added that C&C has a business that "is capable of weathering these challenges".
Bulmers volumes in Ireland were 6pc higher in the period, while Tennent's volumes rose 2pc in the Scottish independent free trade channel. Volume exports of Tennent's rose 50pc.
Mr Glancey said the "fizz is back" in Magners sales, with volumes rising 11pc and its market share growing by 1.4 percentage points.
"The Magners brand is very well regarded by UK consumers," he said. "There's been quite a lot of rationalisation this year by the UK supermarkets, so it's pretty much survival of the fittest. If you've got a good brand, you're there. If you don't, you're killed off."
He said the sales improvements in its main products had been underpinned by increased marketing spend, with the group having spent €3.6m more on core brand marketing in the period than a year ago.
The company has also invested €9m in a new bottling facility at its Clonmel plant in the period.
C&C chief financial officer Kenny Nieson said that the company has been "quite protective" of its balance sheet to date, and that while the it remains open to acquisitions, it "hasn't identified the right target as of yet".
"We'd rather be buying businesses and expanding C&C than returning capital to shareholders," he said.
But shares in the group fell 2.5pc as investors digested the results.
Davy Stockbrokers said foreign exchange headwinds will weigh on C&C's full-year results.