Strong Financial Performance by C&C Group But COVID-19 Will Impact Strategy
C&C Group increased net revenue by 7.8% on a constant currency basis to €1.719 billion and operating profit (excluding the impact of IFRS 16 leases) by 10.4% to €120.8 million for the twelve months ended 29 February 2020. Pre-tax exceptional items incurred in the current financial year amounted to €92.5 million with €47.6 million directly related to COVID-19 and €34.1 million related to write down of some brands.
C&C Group is a leading, vertically integrated premium drinks company which manufactures, markets and distributes branded beer, cider, wine, spirits and soft drinks across the UK and Ireland. Its portfolio of owned/exclusive brands include: Bulmers, the leading Irish cider brand; Tennent’s, the leading Scottish beer brand; Magners the premium international cider brand; as well as a range of fast-growing, super-premium and craft ciders and beers. C&C Group exports its Magners and Tennent’s brands to over 60 countries worldwide.
C&C Group operates owned brand and contract manufacturing/packing operations in Ireland, Scotland and the US. Operating under the Matthew Clark, Bibendum, Tennent’s and C&C Gleeson brands, C&C Group supplies over 35,000 pubs, bars, restaurants and hotels, and is a key route-to-market for major international beverage companies. C&C Group also has a minority investment in the Admiral Taverns tenanted pub group, which owns over 1,000 pubs across England & Wales and exports its Magners and Tennent’s brands to over 60 countries worldwide.
The COVID-19 pandemic is having a significant impact on business and C&C Group is proactively taking measures to reduce operating costs, maximise available cash flow, and maintain and strengthen its liquidity position. In March 2020, the group announced the successful issue of approximately €140 million of new US Private Placement (USPP) notes to diversify its sources of debt finance.
Stewart Gilliland, interim executive chairman of C&C Group, comments: “The ongoing closure of the hospitality sector has material implications for our business and earnings potential, with approximately 80% of our revenue derived from the on-trade channel. An emerging trend from this shutdown however has been an immediate shift in consumption dynamics, resulting in increased demand in the off-trade channel. To capitalise on this behavioural shift, we have reallocated resources behind our Take-Home proposition and seek to optimise our business model in this channel. We entered this crisis with a robust balance sheet and have further strengthened that position with additional liquidity enhancing actions.”
He elaborates: “We continue to work with our customers who face significant challenges to offer our support where possible to overcome these difficulties together. Collaborating with our suppliers, we have been able to implement a range of initiatives to support our customers.”
Stewart Gilliland continues “The progress of the group in FY2020 further strengthens our belief in the long-term strategy for the business. As the largest alcohol distributor in the UK and Ireland, we have secured a unique platform and our results for FY2020 reflect the strength of this position. In the short-term, execution of our strategy will be impacted by COVID-19, which has necessitated the temporary withdrawal of our future guidance. Trading since the lockdown measures were announced has clearly been challenging, however, our business is structurally integral to the markets we serve and, together with our local, fabric brands, puts us in a strong position to re-engage with customers and consumers once restrictions across pubs, bars and restaurants, are lifted.”
