C&C reports 9% drop in revenue

DRINKS group C&C has reported a 9% year-on-year drop in third quarter revenue; driven by sales declines in its core cider business.

However, the Dublin and Clonmel-based business said its recent acquisition of Scottish lager brand Tennent’s should boost full-year figures for the 12 months to the end of February.

In a trading update yesterday, C&C said revenue for the three months to the end of November fell on the back of a 13% drop in cider sales and a 4% decline in revenue at its non-core spirits and liqueurs division.

The cider revenues for the quarter – incorporating a 17% fall in Britain and a 13% sales decline in the Irish market – still only refer to the group’s Bulmers and Magners brands. C&C’s recent €50m acquisition of the Gaymer Cider Company, which will promote the group to one of the leading cider producers in Britain, will only affect earnings in its next financial year.

That acquisition from Constellation Brands, initially announced in late November, was formally completed yesterday, although it won’t be integrated into the full C&C group until a review by the British Office of Fair Trading (OFT) is completed.

Yesterday’s trading update also included figures for the nine months up to the end of November, which showed a 7% like-for-like revenue decline (8% for cider alone). However, in trading since the beginning of December overall cider volumes are up by 3%, year-on-year.

Spirits/liqueurs volumes were up by 23%, year-on-year, in December. The group said the integration of the Tennent’s business should contribute €7m to operating profits in the current fiscal year, meaning its financial targets would be ahead of schedule.

Excluding the Tennent’s acquisition, C&C said it expects to deliver an operating profit for its current financial year, in line with previous guidance, meaning a figure towards the top end of the €77m-€82m range.

C&C’s share price was down, marginally, by 2c yesterday, at €2.78.

“Overall, C&C now looks set to deliver flat earnings per share year-on-year, which we would see as encouraging in what has been a very difficult market and economic background in its core Irish and British markets,” Goodbody Stockbrokers’ analyst, Liam Igoe, said in a research note yesterday.