Drinks group C&C said it was increasingly optimistic about its current financial year as the rollout of the vaccination programme raised hopes that some measures could be relaxed later in the year.
C&C also said it would sell its wholly-owned US subsidiary Vermont Hard Cider Company to Northeast Kingdom Drink Group for $20 million. The sale, which is due to complete in the coming weeks, is expected to result in a net book profit for C&C, with the proceeds to be used to reduce the group’s net debt.
In an update for the the 12 months ended February 28th 2021, C&C said the strength of the group’s brand-led distribution model, and its role in the infrastructure of the UK and Irish drinks market, supported a return to profitability and underlying cash generation in July, August and September 2020, when trade restrictions were eased.
The group also said it had gained market share for its cider brands, with Tennent’s lager volume share rising 1.2 per cent to 26.6 per cent, Bulmers growing 3.3 per cent to 50.2 per cent, and Magners share of apple cider in the UK increasing marginally to 9.6 per cent.
The drinks group said its cost reduction programme expected to deliver annualised savings of €18 million against its pre Covid-19 cost base. Among the measures is an acceleration in the optimisation of the English and Scottish delivery networks; the postponement of non-committed capital expenditure, temporary management salary and director fee reductions; a significant reduction in discretionary spending; the renegotiation of the timing of term loan repayment; the implementation of various working capital initiatives; and pausing the payment of dividends.
‘A real affinity’
"C&C has an inherently strong business model, with admired brands that embody provenance and have a real affinity with their markets, coupled with a leading distribution infrastructure in terms of scale and reach," said David Forde, C&C Group chief executive. "While our ability to trade has been severely restricted in hospitality, our brands have performed strongly in the off-trade. The group has been working hard to ensure that we are primed and ready to serve our on-trade customers as and when the hospitality sector is allowed to reopen, from a more streamlined base and with new brand partners, in the post pandemic market."
C&C formally withdrew guidance on June 3rd 2020, and said it has not been in a position to provide guidance on earnings or related measures.
However, the drinks group said it was increasingly optimistic about its 2022 financial year, as the roll-out of the Covid-19 vaccination programme continues and is expected to lead to an easing of on-trade restrictions across the UK and Ireland.
The group predicted its business model along with reduced operating costs would support a stronger return to trading cash flows and profitability once restrictions ease and the hospitality industry reopens.
