TENNENT’S Lager owner C&C Group has reported “resilient” trading over the key festive period despite some adverse weather conditions in the UK.
The Dublin-based company, which is listed on the London Stock Exchange, said in a trading update that it expects underlying operating profit to align to current market expectations.
In the 10 months to December 2023, the group’s net revenue increased 6% although distribution net revenue fell by 3%.
In a trading update, the group said that it expects underlying operating profit to be in line with current market expectations.
C&C owns brands including Magners and Bulmers Irish ciders, Heverlee, Caledonia Best, and Addlestones cider. Meanwhile, its Matthew Clark and Bibendum (MCB) business supplies wine and spirits to thousands of bars, restaurants and hotels across the UK. The group exports its Magners and Tennent’s brands to over 40 countries.
It described its service levels in its GB distribution business in the period as “industry leading levels over the Christmas trading period, “reflecting the group’s commitment to deliver market-leading customer service through GB’s preeminent distribution platform”.
C&C noted: “While current market conditions remain challenging, mitigating inflationary impacts, improved operating efficiency, business simplification, and gaining customers continue to be the group’s operating priorities in the medium term. An update will be provided as part of our full-year results announcement later this year.
‘Robust’ performance by Tennent’s and Magners boosts C&C's recovery
“With increasing confidence in the medium-term outlook for the business and its strong cash generation capabilities, the board reaffirms its intention to distribute up to 150 million euros to shareholders over the next three fiscal years while maintaining the group’s leverage target.”
Greg Johnson, an equity research analyst for travel and leisure at Shore Capital, noted: “The key message being trading was resilient over the period. Service levels continue to strengthen and current year estimates remain unchanged.
“We see this as a reassuring update given the difficulties over the last few periods, especially when set against the current valuation.”
He added: “Overall, after a difficult period, we are encouraged to see a resilient performance over Christmas trading and trading in line with current expectations. With the ERP issues appearing behind the group, we anticipate a snap back in profitability.
“Longer term, we continue to see the potential to further rebuild margins and broaden its portfolio of drinks brands.”
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The “difficulties” referred to by Shore Capital came after a botched IT upgrade in its UK wine wholesaling business last year. Operating profit in the six months ended August 31, 2023, was 30.5m euros, down 22.8m euros and principally driven by a one-off 22m euros impact of the complex enterprise resource planning (ERP) system upgrade in its Matthew Clark and Bibendum (MCB) businesses in Great Britain.
Net revenue of 872.5m euros for those six months was down 1.2% on the same period in 2022.
At the time, Patrick McMahon, C&C Group chief executive officer, said: “Set against a difficult market backdrop we are pleased with the strength of the performance of our branded businesses in Ireland and Scotland in the period. We have made significant progress in restoring customer service levels following the ERP system implementation issues in our GB distribution business within our planned timeframe.”
C&C will issue its full-year results in May.
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