C&C still on track to meet targets

Drinks group C&C has told shareholders it remains on track to meet current year financial targets of mid-single digit operating profit growth.

At the group’s AGM in Dublin, yesterday, management said that its core operations — the cider and lager markets in Ireland and Scotland — delivered “a solid performance” in the first four months of its current financial year — basically March to June inclusive.

“Comparatives for the second quarter are tougher, but the business remains on track for good earnings growth from both territories,” shareholders were told yesterday.

In late May, C&C reported its fifth consecutive year of earnings growth, saying pre-tax profits (for the year to the end of February) rose by 6% to €116.2m, revenue jumped by 2.2% to €94.2m and adjusted diluted earnings per share were up by 6% to 29.5c.

Performance for the first four months of the group’s new financial year has again been driven by sales of Bulmers/Magners cider and Tennent’s lager in Ireland and Scotland. However, while market conditions in England and Wales remain challenging, management said they are “no less relevant to the group’s economics”.

“Some progress has been made towards stabilisation of our brands and earnings in the first four months,” management added.

Performance in the US has been weak of late, as expected, but management is likely to offer a more meaty update in its half-year results announcement in October. At that stage, clearer results should be gleaned from new marketing campaigns while the new $34m (€25m) cidery will have opened.

Excluding the US, volumes in C&C’s other export markets were up, over the course of the four months under review, in double-digit growth territory.

“C&C believes that the fundamentals of its core markets, and its position within those markets, support continued earnings growth,” management said.

According to Davy Stockbrokers’ Cathal Kenny: “The move towards a multi-beverage and wholesaling model in the key domestic markets of Scotland and Ireland is starting to take shape. The evolution of the operating model in its core markets should support earnings growth over the medium term while delivering enhanced levels of stability and visibility.”