Shares in Bulmers' owner C&C surge as cider maker eyes €55m full-year profit

C&C Group chief executive David Forde said he would be 'reasonably comfortable' with the near-term profit outlook, but warned such an outcome was reliant on there being no further significant Covid-related setbacks in its core markets of Ireland and the UK.

Shares in drinks group C&C surged more than 6% on the back of the Bulmers cider owner saying it was confident of shrugging off Covid restrictions and supply chain challenges to return to a full-year profit in its current financial year.

The group – which also owns Magners cider and the Five Lamps and Tennent’s beer brands – posted an operating profit of €16m for the six months to the end of August. 

That marked a turnaround from a first-half operating loss of €13.2m last year. C&C’s first-half revenues, this year, jumped by 65% to €657.3m, leading management to reinstate earnings guidance and confidently predict a return to full-year profitability.

C&C now expects to generate full-year operating profits of between €50m and €55m for the 12 months to the end of next February. 

In its last Covid-restriction hit financial year, the group made an operating loss of just under €60m. In the year before the Covid crisis hit, it made a profit of nearly €119m.

Speaking on the back of the latest first-half results, C&C chief executive David Forde said the drinks group was recovering and restarting momentum. 

He said he would be “reasonably comfortable” with the near-term profit outlook, but warned such an outcome was reliant on there being no further significant Covid-related setbacks in its core markets of Ireland and the UK.

As much as 80% of C&C’s revenues are generated from pub and on-trade sales, although its share of the off-trade – drink sales through off-licences and supermarkets – has increased in recent times.

Boosting off-trade business

Mr Forde said he remained confident in the ability of the on-trade to continue to recover, but said C&C would aim to keep boosting its off-trade business too. 

That side of the business has been buoyed by the group gaining Irish distribution rights to the likes of Budweiser and Corona. Mr Forde said C&C would look to grow organically in the off-trade, while also expanding its distribution arm with new product wins.

But, in the main, the group’s strong first-half showing was driven by the reopening of pubs and bars in the UK and Ireland, in May and July respectively. 

A forced increase in staycation holidays, good weather and events like the European Championships also helped boost sales.

Mr Forde said a return to a full lockdown of the on-trade and hospitality sector would be “unimaginable”. 

However, he said C&C was confident of navigating the Covid and supply chain challenges. Its UK drink distribution and logistics business is particularly exposed to supply chain issues and HGV driver shortages. 

However, the group has been mitigating problems by forwarding Christmas deliveries to this month, among other measures.

Goodbody said the better-than-expected momentum was likely to result in it upping its full-year profit forecast for C&C to around €52.5m.

“Importantly, the strong recovery to date provides us with confidence that the group should be able to deliver at least in line with our current 2023 earnings forecast for €104m,” said Goodbody analyst Patrick Higgins.