C&C shares surge as Bulmers owner back in profit despite Covid impact

Covid lockdowns may dent profits but C&C says its ciders and beer have been trading well, and it has hedged against inflation
C&C shares surge as Bulmers owner back in profit despite Covid impact

Bulmers cider owner C&C Group expects to post a return to profit in its upcoming annual results, although the final figure will be lower than expected given recent Covid restrictions.

Shares in Bulmers cider owner C&C surged by more than 10% on the drinks group flagging a return to full-year profitability and its ability to withstand inflationary cost pressures.

The group — which also owns Magners cider and the beer brands Five Lamps and Tennent’s — is due to publish annual figures, for the 12 months to the end of February, in May.

In a trading update ahead of those results, C&C said it now expects to report annual operating profits of between €45m and €47m.

That outcome would show a significant recovery from the height of the Covid lockdown period.

Profits trimmed by lockdowns

In the 12 months to the end of February 2021, the group showed a loss of nearly €60m, compared to a near €120m profit for the 12 months immediately prior to the pandemic taking hold.

However, C&C’s profit outlook for its latest year is weaker than previously forecast as the second half of the year was negatively affected by renewed Government restrictions on the hospitality industry in late 2021.

Back in October, C&C said it was expecting full year operating profits to be in the range of €50m-€55m.

However, in January it held off on issuing a formal annual profit forecast, citing the impact of the most recent Covid restrictions.

In its new update, C&C said it has been pleased with its “positive” trading levels, in the bar, pub and hotel-related on-trade, since restrictions were eased in January and is back trading with 81% of direct delivered outlets compared to early 2020 levels.

C&C's protections against inflation

Noting inflation pressures, C&C said while it is operating in “an evolving inflationary cost environment” it has “a degree of protection” through its completed €18m cost reduction plan, recent price increases, and hedging on input costs.

Despite the share surge, the C&C stock is still down around 10% so far this year and nearly 25% over the past 12 months.

Over the past five years, the stock has fallen by 40%. The drinks group also said it expects its net debt to be around €263m.

This would be compared to €442m at the end of the previous financial year.

“This significant reduction in net debt, together with an improving business performance, will substantially enhance our financial flexibility and enable C&C to deliver our strategic objectives,” it said.

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