Friday 22 November 2019

Cider-maker has more to worry about than the weather

Peter Flanagan

Managers at C&C blamed the weather for disappointing trading figures, but the markets are not buying it.

It has been a rough few weeks for the cider-maker and its share price. It may only be only getting started.

The company's stock fell as much as 11pc yesterday after reporting first-quarter figures that were well below what was expected.

Analysts, especially Citibank, have been flagging potential problems at C&Cs US business, and the company has pushed back sharply.

Yesterday the official numbers came in, and while they may have not been quite as bad as Citi had been suggesting, they were pretty brutal.

Woodchuck, the main cider brand in the US and part of a portfolio that cost C&C more than $300m (€270m) last year, saw its volumes barely move, rising 3pc.

It was worse closer to home. In Ireland, volumes across the business fell 11.5pc and revenues dropped by a similar figure. In the UK it was arguably worse. Cider volumes and revenues fell off a cliff dropping by nearly a quarter. Beer was up, but C&C, with brands in the UK like Magners and Gaymers, remains primarily a cider business.

Perhaps the most worrying aspect of the IMS was the reasons given by the company for the weak performance.

Consumer spending is down in Ireland and the UK – we know that – but the company went on to blame "unseasonably cold weather in March and April".

It's not unusual for investors to avoid companies in this part of the world who blame the weather when their numbers are weak.

After all, unpredictable weather is normal here, and it's not like we're talking about wildfires destroying orchards or floods that swept away shops and depots.

It was just a bit colder than usual this spring.

In the year to date, C&C shares are down 16pc, while the wider ISEQ is up 16pc. Since March, the company has lost more than a quarter of its value.

CEO Stephen Glancey and co are heading towards a credibility problem with the market. They need to address their problems, and quickly.

Irish Independent

Also in Business