C&C sees ‘resilient’ first half, but warns of challenges ahead

Drinks group C&C saw revenue and profit grow in the first half of the year, despite ongoing economic challenges.

The company, which sells beers such as Tennents, Bulmers and Magners cider, wine, spirits and soft drinks, said net revenue was up 35.6 per cent to €903 million in the six months to August 31st. Adjusted earnings before interest, tax, depreciation and amortisation were €70.9 million.

Over the same period, operating profit surged 254.2 per cent to €54.9 million, which was at the higher end of guidance but still below pre-Covid levels.

Its operating margin was up at 6.1 per cent, up from 2.3 per cent in the comparative period.

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However, the group warned that September revenues were down 5 per cent, indicating that more challenging times lie ahead. Sales across the last 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 are “watching their credit card bills, with one eye on Christmas”.

He predicted a lot of “volatility” in coming months, as the impact on consumer spending of the inflation crisis is weighed with the potential uplift on drink sales of the upcoming World Cup, as well the first Christmas period in Ireland and the UK to be unaffected by Covid restrictions since 2019.

“Pubs are proving to be pretty resilient. There is a squeeze in trendier bars in the UK and also restaurants,” he said. “I think we will see consumers being sensible, but they will still want to go out.”

While he expects sales of drink to be boosted by the upcoming Fifa World Cup in Qatar, he said it will displace some sales that would have come from customers going out to watch Premier League matches. The second half of the year will be the first unrestricted Christmas trading period for C&C for three years.

“November and December will help [to boost sales]. There is an upside there. We expects pubs, bars and restaurants to be closer to a normal level of sales. But there are a lot of moving parts,” he added.

He welcomed the Government’s move this week to overhaul licensing laws: “The demography of the country has changed. It is more cosmopolitan and multicultural than before and people like to socialise in different ways. The licensing laws warranted a little reflection.”

He highlighted that Bulmers is growing its market share again in Ireland, with 64 per cent market share. It grew its share in the first half of the year by almost 5 percentage points in the off-trade and 1 percentage point in pubs, after C&C doubled its marketing budget as a percentage of sales.

In a statement to investors on Thursday morning, Mr Forde said the company had experienced “profit growth ... coupled with margin expansion as the business returns to a more normalised product/price and channel mix”.

“We are delivering on a number of key priorities outlined at our recent capital markets day; achieving our guided medium-term targets for distribution margins and target leverage. Further, we increased brand investment, grew our share of premium beer, increased revenue per customer, grew our agency brands and also implemented a number of our sustainability initiatives,” he said.

“The group’s priority continues to be on executing our strategy, enhancing efficiencies to insulate the business from inflationary pressures where possible, whilst progressing our sustainability ambitions.“

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