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C&C Group has warned its full-year operating profits will be lower than forecast after a fall in third-quarter volumes across its domestic and US units.
C&C Group blamed trading conditions for its poor Q3 performance
In a trading update today, the Dublin-based firm said that it is revising its full-year operating profit guidance from around EUR125m down to EUR115m (US$135.8m) due to a weak Q3 and Christmas period, as it blamed "poor trading conditions". Operating profits in the company's last financial year, stripping out exceptional items, were EUR127m.
In the group's core markets of Ireland and Scotland, volumes in the three months to the end of November were down 3.4% and 2.4% respectively. In Ireland, C&C said the market was “slow” with October and November “particularly quiet months”. The situation was mirrored in Scotland, where trading over the Christmas period was also “below expectations”.
In England and Wales, the group said its cider volumes fell 9.8% in the quarter, while sales slipped 18.2%. C&C pointed to increased pricing pressure in the off-trade due to “intensifying competition”.
As a result, the company is pushing ahead with plans to "significantly reduce costs" in England and Wales, which will "return the cider business to acceptable levels of profitability, expand margins and increase investment behind the brand portfolio".
In the US, where the company owns the Woodchuck cider brand, Q3 volumes fell by 16.2%. However, this was an improvement on a 21% drop in the group's first half. C&C said the US cider category remains “very attractive” while it is “firmly committed to capitalising on the long-term growth potential”.
In other export markets, C&C said its underlying performance was “strong”. In Europe, Q3 volumes were up 18.6%, with Magners up 7.1% and Tennent’s up 62.1%. In Australia, however, distribution issues dragged down volumes but the problems are now resolved, the company said.
No mention was made in the statement of C&C's failed approach for Spirit Pub Co. Last week, the company confirmed it would not table a bid for the pub group, leaving the path clear for Greene King. Stephen Glancey said in October he was "puzzled" at how swiftly Spirit had rejected its initial approach.
Sectors: Beer & cider, Company results
