C&C forecast cut as cider sales fall

Underwhelming summer sales data for the Magners cider brand in Britain has led Davy Stockbrokers to downgrade its profit outlook for the product’s Irish parent, C&C by €3m.

At the Dublin-headquartered drinks group’s AGM two months ago, management forecast strong growth — saying that operating profits for the 12 months to the end of February should come in at between €112m and €118m.

This would follow profits of €111.2m in its last financial year.

However, Nielsen-conducted sales data for the British off-trade market (off-licences, shops, etc) — covering the four-week period up to Jul 21 — shows a disappointing 28% decline in sales of Magners, with year-to-date volumes down by 38%.

Overall sales of cider in Britain — when pubs are excluded — fell 10.6% in July, according to the latest Nielsen data, and are down 7% for the year to date. &&

“Given pressure in the British off-trade channel and little improvement in trading in Ireland, we’re nudging back our estimates to the bottom of the guidance range, of €112m,” wrote Davy analysts Barry Gallagher and Richard O’Donovan in a research note published yesterday.

Davy had previously forecast full-year operating profits for C&C of about €115m.

The note said: “Off-trade channel volume can be volatile and can be significantly influenced by listings in multiples and the timing of promotions.

“These may, in part, explain some of Magners’ underperformance in this channel.”

At June’s AGM, C&C’s chief executive, Stephen Glancey, said management expected to see a recovery in cider volumes and revenues “over the remainder of the year”.

There was better reading for Magners in the on-trade/pub environment. The latest Nielsen data showed a 6% rise in year-on-year sales of the product in British pubs in June — mainly driven by 26% growth in Scotland.

The British on-trade environment represents about 17% of C&C’s group earnings.

Meanwhile, data for the US market showed cider — in general — rising by 80%, year-on-year, in July.

C&C holds about 20% of the US cider market.


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