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C&C Group will be a Brexit victim - analyst

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An analyst has heaped further misery on C&C Group, saying the Magners owner will "suffer severely" from the UK's decision to leave the EU.

C&C Group makes Magners in Ireland for sale in the UK

C&C Group makes Magners in Ireland for sale in the UK

In a note today, Société Générale's  Andrew Holland said the Ireland-based C&C Group, which saw sales and profits fall in its most recent full-year results, will be a 'Brexit' loser because half of its business comes from the UK. He said that transactional currency swings resulting from the vote will take their toll on the company, which produces Magners cider in Ireland for sale in the UK.

"As a result of the currency swings since the EU referendum result, we see more downside for C&C, especially given its exposure to the UK market," Holland said.

The UK last week voted to exit the European Union, sparkling a plunge in the value of the Pound and uncertainty in global markets. UK cider makers told just-drinks that it is "business as usual" but warned that it is still too early to tell what effect the referendum will have on the industry.

Today, Holland said that Société Générale has "no visibility" on potential trade barriers between the UK and the EU because of the vote and that "we do not expect visibility on this for some time".

C&C Group in January said it was to close its cider packaging and production facilities in England. It will consolidate production from its site in Shepton Mallet into its manufacturing site in Clonmel, Tipperary.

In a note that downgraded Societe General's position on C&C Group to "sell", Holland also said he is worried C&C Group might make a "panic acquisition" as it has a poor track record in M&A.

Meanwhile, he said Heineken will continue to pressure C&C Group in its domestic cider market, where the Dutch brewer's Orchard Thieves - launched exclusively into Ireland in April - is causing disruption. One analysts said in October that the roll-out could threaten C&C Group's margins in Ireland and the dominance of Bulmers, which accounts for about 92% of the Irish cider market.


Sectors: Beer & cider

Companies: C&C Group plc

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