C&C expects 9.5% drop in profit

Geoff Percival

Cider and lager maker C&C has said operating profits for its recently completed financial year are set to be down by around 9.5% to €86m and that it continues to see challenging trading conditions, particularly in its home market.

The Dublin-headquartered maker of twin cider brands Bulmers and Magners, and Tennent’s lager said, in a trading update, that second half earnings before interest and tax (Ebit) fell by around 10% in the second half of the year, following on from an 8.3% decrease in the first half.

C&C is set to publish its results for the 12 months to the end of February in May. Regarding the Irish market it said trading remains “highly competitive”, with Bulmers sales volumes down 6%, although the brand grew its share of the off-trade. That said, C&C expects its Irish performance to improve next year.

In the UK — where the outlook remains challenging for consumer spending — C&C said the market which it serves is proving “resilient”. The group last year acquired a 47% stake in pub group Admiral Taverns and extended its distribution deal with brewing giant AB InBev to improve its route-to-market.

However, a currency translation of €3m and one-off impacts relating to that AB InBev deal negatively impacted on last year’s profitability.

C&C’s shares managed to inch up yesterday, however, as the company said trading and cash generation for the year had broadly been in line with expectations.

“With a free cash flow yield of 7.1% and a dividend yield of 5.3%, we believe the shares are undervalued,” said Davy.