C&C flags ‘significant impact’ of cost-of-living squeeze on revenues

Drinks group C&C expects full-year operating profits of €84 million-€88 million in its current financial year, up from €47.9 million in 2021, despite a worsening cost-of-living squeeze, which it said had put pressure on consumer spending.

In an update on the second half of its trading year on Friday, the London-listed company – which sells beers such as Tennents, Bulmers and Magners cider, wine, spirits and soft drinks – said its revenues over the course of the “key” December trading month were up 20 per cent on December 2021 when trading was hampered by public health restrictions in the UK and Ireland.

Despite this, the Dublin-headquartered group reiterated its concern about cost-of-living pressures and disruption to public transportation in the UK over the normally busy Christmas period.

“We believe consumer spending pressure is a driver behind this trading performance and will continue to be so in the near term,” it said. “Further, trading has been significantly impacted by rail network strikes in the UK, reducing footfall in urban areas over the key festive trading period.”

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In spite of the “near-term challenges”, C&C said it would continue to operate within its stated leverage range. “This, coupled with our strong free cash flow generation will ensure that our stated capital allocation objectives are maintained,” it said.

Davy said in a note on Friday that its analysts now expect to lower C&C’s full-year profit guidance to about €86 million, towards the mid-range of the company’s guidance. This represents a 9-10 per cent downgrade compared with previous Davy estimates of about €95 million.

Publishing its first-half results in October last year, the group warned that September revenues were down 5 per cent, indicating that more challenging times lie ahead. Sales across the third-quarter were down 8 per cent.

Chief executive David Forde said the company was pleased at its resilient performance. Speaking to The Irish Times after the release of the results, he said people had travelled abroad this summer and there was less domestic tourism than in previous years, so they were “watching their credit card bills, with one eye on Christmas”.

C&C said at the time that the board intended to recommence a full and final year dividend following the release of its full-year results.