Tuesday 12 December 2017

C&C shares fall as profits at lower end of predictions

Peter Flanagan

Peter Flanagan

SHARES in C&C have fallen after the company said full-year profits will be at the lower end of guidance, despite a strong third-quarter performance.

In an interim management statement for the three months to the end of December, the drinks maker said yesterday it expected to post operating profit before acquisitions that will be at the lower end of its guidance of €112m to €118m.

The forecast came even as the company posted what it described as "an improved performance" in Ireland, and reported a 1.8pc increase in volumes here during the quarter.

However, even as volumes here increased, revenues continued to tumble. At the end of December, turnover from Ireland had slid 3.5pc quarter on quarter and was down 10pc year on year.

Cider volumes increased 0.9pc between October and December in what was a "steady" performance by Bulmers, although beer jumped 7pc, driven largely by Tennent's.

"As anticipated, trading conditions stabilised following an unseasonably wet summer period and volumes benefited from trade buy-in ahead of the December duty rise," said C&C.

Finance minister Michael Noonan slapped another 10c on the price of a pint of beer or cider in last month's Budget.

"Pricing pressure continued in the quarter, primarily in the off-trade, as promotional activity showed little sign of easing. Volume continues to migrate from the on-trade to the off-trade channel but the rate of migration was slower in the quarter," the firm added.

C&C continued to struggle in the UK, with revenue and volumes both falling by more than 10pc during the quarter. In contrast, revenue from the company's international business surged more than 37pc, albeit from a low base.

Davy Stockbrokers' Barry Gallagher said the statement was broadly in line with expectations.

"Ireland's switch from being a strong negative in the C&C story to becoming a positive is probably the most interesting angle from today's update," he added.

"There looks to be an underlying stabilisation of the market. With C&C's more robust business model in Ireland following the Gleeson deal, C&C will have more influence and opportunity in the market," Mr Gallagher said.

The firm announced last year it had agreed to buy Gleeson, the maker of Tipperary Water. Gleeson also holds distribution deals with most pubs on the island.

By the close in Dublin, shares were down 1.1pc at €4.50.

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