C&C Forecasts €86 Million Full Year Operating Profits
Drinks company C&C anticipates its operating profits to be around €86 million for the 12 months to 28 February 2018 (FY18), according to a new trading update.
The company’s Irish cider brand Bulmers had decreasing volumes of about -6% for the period, reflecting the loss of on-trade draught distribution points and an overall cider category decline of -1%.
Irish revenues and profitability were negatively impacted by reduced volumes in the company’s wholesale business and the reversion of certain customers to direct supply from AB InBev, according to C&C.
The company expects cash conversion for FY18 to be within its long term guidance range at c.60% of EBITDA (FY17 53%).
AB InBev Distribution
Meanwhile, the company's expanded distribution agreement with AB InBev for its cider portfolio in the UK gathered momentum in the second half with Magners up 9% during that period.
The cider benefited from the launch of Magners Dark Fruit, increased participation in major retailers’ Christmas promotions and incremental on-trade and wholesale distribution, according to the company.
However, Magners is set to post flat volumes for FY18 against a flat overall UK cider market.
C&C’s wholesale business in Scotland is also performing well, with volumes expected to be growing 2% (FY17 -4%), as well as increased revenues and shares, according to C&C.
Tennent’s grew its share in the IFT and retail channels in the second half, outperforming the overall British market, which declined by -2%. Net sales revenues for Tennent’s are anticipated to grow by 3% for FY18, up from a -4% decline in FY17.
C&C's super-premium portfolio made further progress across all of its domestic markets in the second half, with volumes forecast to exceed 100kHl in FY18, which would make up 4% of the group’s branded volumes.
Organic volume growth from brands such as Menabrea and Heverlee, increased 41% for FY18 (FY17 +60%). In addition, the company saw strong first year contributions from its recently-acquired craft brands 5Lamps in Ireland and Orchard Pig in the UK, according to C&C.
Export territories volume growth is to increase by 2% for FY18 (FY17: +4%). Magners and Tennent’s in Asia Pacific experienced good growth, offset by slower cider growth in Europe due to parallel higher import activity and supply chain disruptions in C&C’s nascent African business, according to the company.
In the US, Woodchuck and its other national brands lost volume and share, reflecting an overall cider category decline in the high single digits. However, Magners and Wyders stabilised through the course of FY18.
The company announced last month that its US subsidiary Vermont Hard Cider would take full responsibility for sales and marketing of the group’s US cider portfolio.
During the year, C&C made a €42 million investment in the UK on-trade through Admiral Taverns and invested a further €12 million on its craft brand portfolio.
Additionally, it returned €73 million to shareholders through a combination of share buy-back and dividends.
The company said it expects performance to improve in the Irish market despite continuing competitive pressures.
The introduction of minimum unit pricing of alcohol in Scotland this year may result in some short-term market disruption, but will bring market value to the category in the longer term, according to C&C.
Its Scottish business and its growing super-premium portfolio have been encouraging to the company in FY18 and both are well positioned to deliver further value growth in the period ahead, the company said.
In the UK, the high street and consumer spending outlook remains challenging but C&C’s brands and the predominantly wet-led, community pubs it serves are proving resilient, it said.
However, the overall UK market will be promising due to C&C being well-embedded through its route-to-market platforms of Admiral Taverns and AB InBev, the company said.
© 2018 - Checkout Magazine by Kevin Duggan