C&C Publishes Results For Six Month Period That Ended On August 31, 2021

Bulmers cider manufacturer C&C Group plc has published its results for the six month period that ended on August 31, 2021.

Details

In a statment 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 announces unaudited results for the six months ended 31 August 2021 ('H1 FY2022')."

C&C continued:

• "Net revenue increased 65.0%(i) to €657.3m, reflecting the progressive reopening of the hospitality sector during the latter months of the first half.
• "In line with the easing of on-trade restrictions, the Group returned to profitability from June onwards.
• "Demonstrating the strength and resilience of the business, C&C recorded an operating profit(iii) of €16.0m for the first half despite some restrictions still in place.
• "Strong working capital discipline and C&C’s inherent cash generation capability resulted in a free cash inflow(v) of €26.2m pre-exceptional and a related free cash flow conversion of 85.1%.
• "Operating profit includes furlough income and temporary salary reductions of €5.2m. The Group discontinued the use of furlough in June when the business returned to profit.
• "Exceptional profit of €3.3m which primarily relates to the profit from the sale of Vermont Hard Cider Company ('VHCC'), COVID-19 provision release, profit on sale of depot offset by Rights Issue costs and increased finance costs due to covenant waivers.
• "Strong balance sheet position with net debt and liquidity of €245.8m(vi) and €474.9m(vii) respectively at end of August.

"STRATEGIC & OPERATING HIGHLIGHTS

• "Successful execution of the Rights Issue which placed C&C in a position of strength as on-trade restrictions eased.
• "Efficiency and cost saving programme on track. Annualised savings of €9.0m generated in first half compared to pre COVID-19 cost base; target to deliver total of €18m annualised savings in FY2022.
• "C&C's exposure to increasing input costs has been well managed in H1 FY2022, with modest exposure in H2 FY2022. With cost and capacity pressures evident, we have communicated a price increase across our GB customer base in October 2021.
• "C&C has effectively managed the various issues affecting the wider industry including shortage of drivers and CO2. C&C's significant in-house network and CO2 recovery systems means the business has been able to broadly meet the needs of customers over the peak summer trading period, ensuring continuity of supply and service.
• "Appointment of Andrea Pozzi to lead a streamlining of the GB businesses; and announced that industry veteran Ralph Findlay will succeed Stewart Gilliland as Chairman in July 2022.

"BRAND STRENGTH

• "The Group invested behind multi-platform and multi-channel advertising campaigns across its core brands over the key summer trading period - with the three brands featuring on TV.
• "Our strong performance in the off-trade has continued with Bulmers and Tennent’s growing MAT volume share in the data to H1 FY2022(ix)(x).

"SYSTEM STRENGTH

• "Against a backdrop of industry wide capacity constraints, we have undertaken an optimisation programme in our GB network, this will drive better customer service whilst helping to deliver our ESG commitments through lower miles travelled.
• "C&C announced the simplification of our GB businesses under one leadership team and commencement of a significant change programme to improve efficiency and customer experience.
• "Continued momentum in our e-commerce business with online ordering in significant growth compared with prepandemic levels.

"ESG COMMITMENTS

• "Eliminated all single-use plastic from our product ranges at Wellpark manufacturing site.
• "Alignment of the Group's Executive Director Long Term Incentive Plan (LTIP) to our environmental targets in June 21.
• "From 1 April 2021 all of the electricity needs at C&C main sites are from renewable sources.

"CURRENT TRADING & OUTLOOK

• "In September 2021, C&C served 89% of outlets versus the same period in 2019 and we are pleased to report that rate of sale per outlet has improved with volumes at 93% of the same period in 2019.
• "Assuming current trading conditions prevail, we expect to deliver FY2022 Operating Profit in the range of €50-€55m.
• "The Group's near-term focus remains on serving customers and meeting demand whilst navigating the industry wide capacity constraints.
• "C&C will continue to execute its change programme as we move to our 'One C&C' GB model."

C&C Group Chief Executive Officer Statement

C&C added, "David Forde, C&C Group Chief Executive Officer: 'Following the easing of on-trade restrictions over H1 FY2022, we are delighted to be back serving our customers and consumers in both indoor and outdoor hospitality across our core markets of UK and Ireland. We are encouraged by how quickly the on-trade recovered and we are pleased to report that trading in the first half has been ahead of plan and our inherent cash generating strengths are reflected in the return of the business to cash generation from June 2021.

"'With our well invested manufacturing facilities, close to the markets we serve, we have been able to react to demand and allocate resource accordingly, to maintain our output, notably being self-sufficient in CO2, navigating the supply issues faced by the industry. Further, we have been partly insulated from the on-going UK capacity constraints due to driver shortages through our network being owned and operated in-house, in addition to the advantages afforded by our leading scale and reach. This has allowed us to broadly meet demand over the peak summer trading period, ensuring we put our brands and our partner’s brands in the hands of the consumers who enjoy them. With this backdrop, I would like to personally thank all of our people who played a part in delivering this performance, their commitment, skill and experience is an invaluable asset to our business.

"'We have continued to progress our strategy, notably building our brand strength through investment in a multi-channel advertising campaign for our Magners, Bulmers and Tennent’s brands. This has in part been reflected by a robust performance in the off-trade and encouraging brand health scores. Our system strength has been enhanced by completion of the GB network optimisation, which will in time both improve service whilst drive efficiencies and reduce emissions. In addition, we have begun work on creating a One C&C GB business, aligning our three trading businesses, Tennent's, Matthew Clark and Bibendum under one leadership team. This initiative will simplify our business while improving our overall customer experience. Lastly, we continue to progress our ESG initiatives with a full transition out of single use plastics in our product ranges at our Wellpark brewery and since April 2021, 100% of the electricity for our main sites is from renewable sources.

"'We entered the second half in a good position and we are focused on continuing to build a better business by developing brand and system strength, while navigating the near-term capacity constraints the industry faces.'"

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