Friday 18 October 2019

C&C's €93m profit benefits from performance of US cider operation

Peter Flanagan

DRINKS firm C&C is on course to boost earnings from its Irish business for the first time in five years as the economy here slowly recovers.

Chief executive Stephen Glancey said he expected the firm to increase profits from Ireland over the next 12 months. That would be the first time profits here have grown since Mr Glancey joined the company in 2008.

"We're poised for earnings growth in Ireland for the first time since I joined and we are pleased with the performance here.

"There will be peaks and troughs but talking medium to longer term, we're reasonably positive on the Irish division," he added.

Mr Glancey was speaking after his company reported full-year profits that matched market expectations, sending shares up more than 2pc.

The C&C stable includes Bulmers, Magners, Tennents and Gaymers ciders.

For the year to end of February, C&C said profits after tax rose marginally to €93m on the back of sales, which climbed 3pc to €724m.

In Ireland, operating profit fell 11pc to €38.5m as revenue slipped 6.1pc to €133m. Significantly, however, the company managed to increase its net margin by 1.3pc in Ireland.

"Following on from the first half of the year, which was dominated by poor summer weather and its impact on cider consumption, trading stabilised in the second half of the financial year," said Mr Glancey.

"Sales of long alcohol drinks such as beer and cider here fell 2pc during the year. That represented a "significant narrowing of the gap in channel performance", the company added.

C&C took a big hit in the UK, where revenue and profit fell by more than 15pc. The company pointed to increased competition in the cider business there. Carlsberg and Heineken both launched cider brands this year, while Stella Artois brought in a new brand in 2011.

Despite the drop, Glancey said he remained "confident" in the sector in the UK, and believed the influx of major players into cider was an endorsement of the sector overall.

In the US, the company began to benefit from its $325m (€242m) purchase of the Vermont Hard Cider company. It contributed operating profit of nearly €2m in the final two months of the year.

Costs at the US business are high at the moment, but C&C said many of the agreements were short term, and the costs would come down over the next year.

Looking ahead, Mr Glancey said this year would be a "transitional one" for the company but, he added, remained on target to hit its full year guidance for 2013.

Analysts were broadly positive on the numbers, with Davy Stockbrokers' Barry Gallagher highlighting the performance of Tennents lager, which increased its sales more than 6pc.

Shares in the company rose more than 2pc on the results to €4.75.

The shares are up more than a third in the last year.

Irish Independent

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