C&C marks profit lead at €110m

C&C HAS firmed up its guidance for its current financial year with a prediction of €110 million in operating profit, which would be slightly ahead of market expectations.

The Dublin-headquartered drinks group — chiefly known for its twin cider brands Bulmers and Magners — previously guided for a profit of between €108m and €115m for the 12 months to the end of February.

However, while the latest figure is still within that range, yesterday marked the first time that the group has given a concise estimate.

In the 12 months to last February, C&C generated operating profits of €88.5m. Analyst estimates for the current year are for profits around the €109m mark.

In a third-quarter trading update issued yesterday, C&C said the strength of its business model “should deliver solid earnings growth in the current financial year”.

Nielsen Research data showed Magners significantly outperformed its British cider peers last month, upping its market share by more than 4%.

C&C’s update showed that Magners increased volume by 5.8% and net revenue by 7.8% in the three months to the end of November when compared to the same period last year.

In Ireland, however, it was slightly different. While the Christmas period showed some improvement in trading, on-trade sales remained “very challenging”, while off-trade growth of over 2% was evident.

Cider revenues in Ireland were down 4.6% year-on-year in the third quarter.

“Despite the challenging top line in cider, earnings contribution from the Irish business in this financial year is expected to be broadly in line with last year. Trading in December was more robust than the previous three months,” the group said.

Christmas trading in Ireland and Britain was more positive than the previous year and volume growth for Bulmers and Magners grew by 1% year-on-year.

However, C&C said that Bulmers’ net revenue remains under pressure from weak conditions in the on-trade and an increase in promotional pricing in the Irish off-trade.

In Britain, while Magners’ quarterly net revenue was up nearly 8%, revenue for the Gaymers brand fell by nearly 25% year-on-year.

C&C’s share price rose by 4c to €3.14 on the back of yesterday’s update.