FDBusiness.com

C&C Group, the Irish and UK drinks business, has reported a flat operating profit on a constant currency basis of €95 million on revenue down by 6.9% to €559 million for the year ended 28 February 2017 (FY2017). However, after a challenging FY2016, the group’s key markets and trading performance was stable over the course of this year, as its three key brands – Magners and Bulmers cider and Tennent’s lager – returned to volume growth and it successfully completed a major rationalisation programme while continuing to grow its Premium portfolio and Export business. Revenue from C&C Group’s key brands was €242 million, against €247 million in the previous year, with the benefit of volume growth offset by competitive pricing and mix pressures, particularly for Magners.

C&C Group’s brands also include: Tipperary Water; Finches soft drinks, as well as a range of niche, premium and craft ciders and beers. C&C Group also owns and manufactures Woodchuck, a leading craft cider brand in the United States and manufactures and distributes a number of third party international beer brands in Scotland and Ireland. C&C is also a leading drinks wholesaler in Scotland and Ireland, where it operates under the Tennent’s and C&C Gleeson brands respectively. Headquartered in Dublin and listed on the Irish and London Stock Exchanges, C&C Group has manufacturing operations in County Tipperary in Ireland, Glasgow in Scotland, and Vermont in USA.

The group returned to operating profit growth in the second half of the year on a constant currency basis, benefitting from an improving trading performance and the cost savings arising from its site rationalisation programme. The devaluation of sterling following the UK’s vote to leave the European Union had a negative of €7.8 million impact on reported group operating profits year-on-year.

C&C Group implemented major changes to its production and distribution footprint during the year as part of its ongoing commitment to operational efficiency. The plant at Borrisoleigh in Ireland was closed and C&C Group sold its cidery and bottling operations at Shepton Mallet in England for €19 million. According to C&C Group, these changes improved its utilisation rates at its key sites to mid 70’s percent, ensuring the cost competitiveness of its products. Manufactured volumes per head were up 24% in the year.

Together with the group-wide overhead reduction activity the site rationalisation savings helped to successfully deliver the €15 million of cost reductions announced in March 2016. The cost savings facilitated incremental investment in marketing and price support to further strengthen C&C Group’s core brand domestic positions.

Stephen Glancey, chief executive of C&C Group, comments: “FY2017 has been a period of significant activity for the group. While trading remained tough, we invested in and delivered volume growth across our core brands; completed a major rationalisation of our production foot print; drove efficiencies across the business; continued to grow our Premium portfolio and Export business; and secured an important new long-term distribution arrangement with AB InBev. After this year of consolidation, we are in materially better shape to meet the ongoing challenges and opportunities within our industry.”

“FY2018 has started in line with expectations but we do remain cautious given the outlook for the consumer across our markets. Political uncertainty continues into the current year making forward predictions on trading patterns and consumer behaviour particularly challenging.” He continues: “We have commenced our planning for Brexit, particularly in respect of trading on both sides and across the border in Ireland. A lot of uncertainties remain, but we are encouraged by the initial determination on both sides to minimise the potential economic and political friction of a hard land border on the Island of Ireland.”