Investors cheer Bulmers maker C&C's growth plan despite €48m Covid lockdown hit
Shares in cider and beer maker C&C jumped by just over 4% despite the Irish drinks group taking a near €48m hit from the Covid-19 disruption, writing down the value of its US operations by over €34m and saying it is burning through €7m of cash per month.
Analysts have also warned it is likely to suffer losses of up to €30m in its current financial year.
The group – best known for its twin Bulmers and Magners cider brands and its Five Lamps and Tennent’s beer brands – said it grew operating profit by 10.4%, to €116.4m, in the 12 months to the end of February, with annual revenue increasing nearly 8% to €1.7bn.
However, total exceptional charges amounted to €92.5m and included the aforementioned Covid and US hits along with a credit loss and the cost of expired unused stock.
C&C said the closure of the hospitality sector has meant no revenue has been generated through the likes of pubs and hotel bars since March. The on-trade typically contributes 80% of C&C’s revenue.
Interim executive chairman Stewart Gilliland said the pandemic has presented “a challenge of unprecedented scale and uncertainty” and that the ongoing closure of the on-trade has “material implications” for C&C’s earnings potential.
The group said it will put more emphasis and investment on its ‘take-home’/off-trade business line as a result of the forced shift in consumption habits.
Davy expects C&C to suffer a €20m-€30m loss in its current financial year, due to the operational disruption.
However, C&C’s shares jumped by more than 5% at one stage on a number of positives – namely that it sees itself being well-placed for industry recovery with ample liquidity; it’s UK distribution business Matthew Clark and Bibendum has reached break-even point; and in the absence of an on-trade, sales of its products in off-licences and supermarkets has been strong since the start of the lockdown.
Meanwhile, Ibec-affiliated group Drinks Ireland has said Irish cider makers require “urgent” cashflow supports to cope with the Covid-19 impact. According to Drinks Ireland the value of Irish cider exports rose 32% last year to €64m and cider makers contributed €60m in excise to the economy.
“We’re also calling for direct online selling to be allowed by craft cider producers, as many may not have a large presence in the off-trade,” said Drinks Ireland chief Jonathan McDade.
