Grand Slam run a tonic for C&C

C&C shares rose almost 8% yesterday after the company said & Irish cider sales were helped by “a successful few months for Irish rugby,” which included the Irish team winning its first Grand Slam in 61 years last March.

The timing of the Easter holidays and the St Patrick’s Day holiday also boosted sales.

However, C&C is anticipating a further decline, of around €10 million, in operating profits for its current financial year, management said yesterday.

This is on the back of a disappointing – if predictable – set of results for the last 12 months.

The Dublin and Clonmel-based drinks group – which, amongst other products, owns the Bulmers/Magners twin cider brands – yesterday reported underlying operating profits of €90.2m for the 12 months to the end of February, down from €125.2m the previous year. Revenue for the year was up by 11% at €514.4m. Yesterday’s figures – which were in line with the group’s forecasts in its last trading update in February – also included a basic loss per share of 19.4c.

C&C’s new chief operating officer/finance director, Stephen Glancey, said the outlook for the current year was “aggressively neutral” with an operating profit of between €77m and €82m expected.

“The big thing about these results is that it doesn’t constitute a profit warning. We’re taking steps to stabilise the ship and make people feel like we’re on the course that we originally set,” he said. A final dividend of 3c per share has been proposed to shareholders, taking the overall dividend for the past year to 9c per share – down by as much as 66% on the previous year.

Management said that next year’s dividend would be “no less than 6c per share”.

The latest figures also show C&C managed to reduce its net debt by €30m in the last year to €226.2m. Mr Glancey said the group’s capital structure is currently very strong.

With regard to its cost-cutting exercises – which have seen just over 120 people lose their job at the company this year – management said savings were being made and that no further job losses are likely.

However, even though initial reaction to the group’s new pear cider product has been positive, overall trading for the first 10 weeks of C&C’s current financial year was mixed, according to management. The group has also shelved the recent testing of Magners in certain parts of Europe (Barcelona and Munich were initial test sites), pending a more comprehensive review of new market opportunities. Less than 10% of C&C’s cider sales are generated outside of Ireland and Britain.

Management also said yesterday there was no plan to sell-off the group’s spirits division, which houses brands such as Tullamore Dew whiskey and Carolan’s Irish Cream. Chief executive John Dunsmore called such products “small scale but profitable”.