IRELAND: C&C Group eyes FY profits growth despite Q1 woes
C&C Group sees no early end to UK and Ireland difficulties
C&C Group expects to post full-year profits growth despite on-going tough trading conditions in its core UK and Ireland markets that saw first-quarter volumes and sales fall in the regions.
In the UK, total cider volumes fell by 22% in the three months to the end of the May, while sales dropped by 13% on a constant currency basis, the Magners and Gaymers producer said in a trading statement today (3 July). In the Republic of Ireland (ROI), total volumes were down 11.5% - cider fell 13.4%, and beer was down by 1.7%
ROI sales fell by 13% on a constant currency basis over the three month period.
There were similar Q1 woes for Tennent's in the UK, which saw volumes drop by 12.4% and sales on a consent currency basis fall by 6%.
“Trading conditions in the group’s core Irish and UK markets were difficult in Q1 and are expected to remain so for the remainder of the year,” the trading statement said. “Volumes were generally weaker in March and April driven by unseasonably cold weather with a relative improvement in May.”
However, the company said it expects operating profits for the year to be between EUR125m (US$190m) and EUR132m, a rise of 15-21% on full-year results released in May, which saw profits dip despite a strong international performance.
International sales continued to perform well in Q1, with volumes and constant currency sales up by about 77%, according to the trading statement.
Company CEO Stephen Glancey said he remains confident in the “attractive prospects” of international cider, especially in the US. “While we have not meaningfully participated in the category growth in the US this quarter, our fundamental assumptions about the attractiveness of the cider category in the US and the broader opportunity for our portfolio in international markets remain unchanged,” Glancey said.
In May, C&C Group CFO Kenny Neison said “it won't be too long” before the company's international sales overtake its beer and cider sales in Ireland. The comments followed December's purchase of Vermont Hard Cider Company, which owns the Woodchuck cider brand.
In the UK, there were big volume drops for Magners and Gaymers, down 20% and 25% respectively. C&C Group said the volumes were mainly lost in the off-trade channel, “which remains intensely competitive”.
C&C Group's share price took a big tumble this morning, down by 11%, as markets reacted unfavourable to fears that Ireland and the UK markets will remain tough for the rest of the year.
To read the company's full official statement, click here.
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