C&C shares jump as firm eyes up craft beer market
SHARES in C&C jumped the most in more than five years yesterday as the drinks company boosted its dividend and said the Irish market was now "on the right trajectory".
For the year to the end of February, C&C, which is best known for Bulmers cider in Ireland and Magners in the UK, said pre-tax profits grew 6pc to €116.2m on revenues that jumped by almost a third to €620.2m. Those numbers translated into earnings per share of 29.5c.
While those figures were broadly in line with expectations, C&C raised the full year dividend to 10c a share – ahead of the 9.5c the market had been expecting.
Company chief executive Stephen Glancey said the results reflected "a robust performance with continued progress against all financial measures.
"Macro conditions in Ireland and the UK are gradually improving and our businesses are well positioned to benefit from improved consumer sentiment in these key markets," he added.
In its Irish business, growth was driven by the takeover of the Gleason's drinks business, which C&C bought 14 months ago. In the cider sector here, Bulmers volumes rose 1.1pc on the year, beating the market overall, which is now stable.
Mr Glancey said his firm was reinvesting in the Irish business and plans to launch a new beer – Clonmel 1650 – to capitalise on the trend for craft beers in Ireland.
Despite the beginnings of a recovery in the Irish business, C&C's UK and US divisions were weaker than expected.
In Britain, Mr Glancey admitted that performance was "some way below a category that returned to volume growth this year".
The cider market in the UK has been commoditised as numerous new firms entered the business and that move has hit C&C's margins.
While the results were broadly positive with an unchanged outlook of "mid single digit growth this year", analysts at Investec questioned the performance of C&C's US business.
The company forked out $305m (€223m) for the Vermont Hard Cider Company (VHCC) two years ago but the business has since struggled.
"Management notes that shipment volumes from VHCC and market-wide depletions fell 1pc and 6pc respectively. Also in the US, Magners and Hornsby volumes declined 17pc and 40pc respectively.
"Overall management notes that extensive wholesaler consolidation and business integration has concluded but that volume growth was 'disappointingly behind' in the cider category," Investec said.