Drinks company C&C, which owns Bulmers/Magners cider, is to review its previously stated guidance for full year operating profit after the group was “significantly impacted” by renewed government restrictions across Ireland and Britain in December.
C&C, which also distributes branded beer, cider, wine, spirits and soft drinks across both markets, provided an update on Friday in relation to its trading performance in the period following its first half 2022 results announced on October 28th.
The group indicated then that, assuming trading conditions prevailed, its full year 2022 operating profit was expected to be in the range of €50 million-€55 million. Trading in September to November was modestly ahead of expectation and the stated guidance.
This was due to positive consumer sentiment and the return of customers to on-trade hospitality, which drove increased profit and cash generation in the quarter, “demonstrating the inherent strength of C&C’s business model”.
Other factors included the group’s continued execution of its cost reduction programme to deliver €18 million of savings in the year, as well as the implementation of price increases to manage inflationary cost pressures.
It also cited its “effective management” of the well-publicised UK supply chain disruption.
However, in December, trading conditions for its on-trade business were “significantly impacted” by renewed government restrictions across Ireland and Britain.
Festive trading
In December, the key festive trading period, C&C traded directly with 81 per cent of on-trade outlets compared to the year before, delivering 64 per cent of the volume against an expectation of 90 per cent and 90 per cent respectively.
While December’s performance was consequently behind expectation, the group said it generated a “modest profit” for the month.
“The operating profit outcome for the second half of the 2022 period will be affected by the nature, extent and duration of government restrictions,” it said.
“Consequently, C&C will provide an updated operating profit range in its full year 2022 pre-close trading statement in March.
“The group has a strong capital structure which provides more than adequate liquidity to support its current and expected business needs, together with its strong free cash flow generation and conversion characteristics.
“As the preeminent brand-led drinks distributor in the UK and Ireland, we have demonstrated our ability to effectively service demand during this period. We continue to drive efficiencies throughout our business in the form of permanent operating cost reduction.”
The group said it was postponing its capital markets day, scheduled for January 19th in London. It said the decision was taken to prioritise the safety and wellbeing of stakeholders, to focus on its business operations and to support its customers whilst fully complying with government and public health advice.
“We will reconvene at the earliest practicable date, when we can safely accommodate in-person attendance to meet with analysts and investors,” the group added.
