C&C Publishes New Trading Update

September 16, 2021 2:00 PM By Dave Simpson

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Bulmers cider manufacturer C&C Group plc has published a new trading update.

Details

In a statement published on its website, C&C said, "C&C Group plc ('C&C' or the 'Group'), a leading, vertically integrated premium drinks company which manufactures, markets and distributes branded beer, cider, wine, spirits and soft drinks across the UK and Ireland, today issues a trading statement for the six months ending 31 August 2021 ('H1 FY2022'). This follows the gradual easing of restrictions and phased reopening of the hospitality sector across Ireland and the UK during the period.

"FY2022 has delivered a strong return to trading, driven by the gradual easing of on-trade restrictions since April 2021 and boosted further by a strong consumer response; summer of good weather; the European Football Championship and 'staycations'. Despite restrictions impacting indoor and outdoor hospitality in H1 FY2022, the Group is pleased to report an improved performance for the first half of the financial year:

"With indoor and outdoor hospitality open across our core markets for the last five weeks of H1 FY2022, we were pleased to serve 90% of the distribution points in August 2021 versus August 2019.
"Group net revenue1 in H1 FY2022 is expected to be €657m, compared with €398m in H1 FY2021 and €896m in H1 FY2020 (pre-COVID-19).
"Operating profit for H1 FY2022 is expected to be €16m, compared to a loss of €12m in H1 FY2021 and a profit of €66m in H1 FY2020.
"Our off-trade channel has continued to perform well; Bulmers growing its share of cider on an MAT basis versus a year and two years ago. In addition, Tennent’s has broadly maintained MAT share versus a year ago and grown share versus two years ago.
"Net Debt of €246m at end of August 2021.

"With the gradual easing of restrictions in the UK on-trade from April 2021, the Group returned to profit and underlying cash generation in May 2021, demonstrating the inherent strength of C&C’s business model. Trading performance continued to improve from May 2021 and Irish outdoor hospitality reopened from June 2021. Our key distribution businesses, Matthew Clark and Bibendum, returned to profitability in June and remained profitable over the key summer trading period. The Group discontinued the use of government furlough support schemes in June 2021.

"As widely publicised, the UK is experiencing a shortage of heavy goods vehicle drivers, however, with the Group’s distribution network controlled inhouse, we have been partly insulated and as a consequence have broadly met customer demand through the peak summer trading period. We continue to work closely with our partners to meet the resurgence in demand. The Group is committed to market leading customer service and is taking steps to create capacity and continue to fulfil demand, however, we remain vigilant on the evolving situation.

"While there is general upward pressure on input costs and in our distribution business as we manage industry wide capacity constraints, our exposure to commodity inflation is largely mitigated in FY2022 through our long-term supply contracts and partnerships. We remain on track with the initiatives to deliver the €18 million in annualised cost savings announced in May 2021.

"Our Brand and System strength have been enhanced in the first half with marketing investment in our core brands of Tennent’s, Bulmers and Magners, a key part of our ‘Win in Cider’ strategy. We have made progress in combining and simplifying our GB businesses, aligning our management structure and creating a change programme for the next 12 months."

C&C CEO Statement

C&C CEO David Forde stated, "Despite sector challenges, our business has shown its inherent strength and cash generation capability in the first half of FY2022. As the on-trade has progressively reopened, we returned to profitability and worked closely with our customers to meet the resurgence in consumer demand. We continue to invest in our brands, most notably with the recent launch of multi-channel advertising campaigns for our iconic Tennent’s, Bulmers and Magners brands. Our focus remains on building a better business by further developing our brand and system strength, while continuing to navigate the near-term capacity constraints our industry faces."

Half Year Results Announcement Date

C&C added, "C&C will announce FY2022 first half results on Thursday, 28 October, 2021, at which time the Group intends to reinstate guidance."

New Non-Executive Director And Chair Designate

C&C has also announced that it has appointed Ralph Findlay as a non-executive director and chair designate.

In a separate statement published on its website, C&C said, "C&C Group plc ('C&C' or the 'Group'), a leading, vertically integrated premium drinks company which manufactures, markets and distributes branded beer, cider, wine, spirits and soft drinks across the UK and Ireland, are pleased to announce the appointment of Ralph Findlay as a director and Chair designate. Mr. Findlay will join the Board on 1 March, 2022 as a Non-Executive Director and will succeed Stewart Gilliland as Chair following C&C’s Annual General Meeting ('AGM') in July 2022. Mr. Gilliland had previously announced his intention to step down from the Board at the 2021 AGM.

"Mr. Findlay's appointment follows a thorough evaluation and succession process led by the Nomination Committee, in conjunction with independent executive search firm, Spencer Stuart. Mr Findlay brings significant industry and listed company experience to the C&C Board.

"Retirement of Stewart Gilliland

"Stewart Gilliland was appointed a Non-Executive Director of the Group in April 2012 and as Chair in July 2018. Under his leadership the Group has developed significantly, successfully integrating and optimising the Matthew Clark and Bibendum businesses, diversifying Board membership, and leading the Group’s response to the challenges of COVID-19.

"Appointment of Ralph Findlay

"Ralph Findlay brings extensive drinks industry experience to C&C. He has served as Chief Executive Officer of Marston's, the UK pub group, since 2001 and will retire from that role on 2 October, 2021. Most recently, Ralph guided Marston's through the successful sale of its brewing business into a £780m joint venture with Carlsberg in May 2020. Ralph has served on the Marston’s Board since 1996, having previously held the role of Finance Director before being appointed Chief Executive Officer in 2001. Ralph was appointed a Non-Executive Director of Vistry Group plc in 2015 and has served as Senior Independent Director since January 2020. He also previously served as Chair of the British Beer and Pub Association (BBPA).

"Stewart Gilliland, C&C Chair, said, 'It has been a pleasure working as part of the C&C business for the last nine years. During my tenure as Chair, the Group has transformed into the leading final-mile supplier to the on-trade in the UK and Ireland and had to navigate through the most challenging period in our industry's history. I am privileged to have worked with such a talented and committed team who have managed these challenges so effectively and positioned the business to perform as we emerge from the pandemic. I look forward to welcoming Ralph to the Board next year and wish him every success for the future as the Group's next Chair.'

"Vincent Crowley, Senior Independent Director, said, 'Ralph brings extensive industry experience to the Board and we are delighted to welcome him to C&C. He held a senior role at Marston's for 25 years and has a deep understanding of the beverage and hospitality sector in the UK, one of our core markets, and internationally. He also brings extensive listed company board experience. We look forward to working with Ralph and drawing on his insight and expertise in the years ahead.

"'On behalf of the Board, and the entire Group, I would also like to extend our gratitude to Stewart for his contribution to C&C over the past nine years and in particular for his guidance and leadership during his tenure as Chair. We will wish him well for the future when the time comes for him to hand over to Ralph.'

"Ralph Findlay said, 'It is an exciting time to be joining C&C and I am very much looking forward to working with the Board and the wider team. C&C has iconic brands and a market leading distribution capability in the UK and Ireland. I am pleased to have the opportunity to play a role in driving the future success of the business for all our stakeholders including customers, consumers and shareholders.'"