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Beer and cider producer and distributer C&C Group has warned rail strikes and cost of living pressures will hit its full year performance, despite strong trading in December.

Despite year-on-year net revenue growth of 20% in its key trading month of December 2022, the group said performance had been hit by other headwinds facing the sector.

It said consumer spending pressure had inhibited profitability and will continue to be so in the near-term. Additionally, trading has been significantly impacted by rail network strikes in the UK, reducing footfall in urban areas over the key festive trading period.

It said UK hospitality booking cancellations meant bookings over the festive period in the sector were down by approximately 30% with walk-ins down 28% against pre-pandemic levels 2019

Therefore, it now expects the group’s full year operating profit range to be between €84-€88m.

Despite the near-term challenges, the group noted it continues to operate well within its stated leverage range (less than 2.0x), which coupled with strong free cash flow generation will ensure that capital allocation objectives are maintained.

C&C said it will also continue to review and drive efficiencies throughout the business, “while ensuring we deliver a market leading offering to our customers and consumers”.

The group’s shares are down 10.7% to 164.1p on the news.

Morning update

Logistics firm Wincanton has issued an update on its third quarter trading performance, including the seasonal retail peak activity.

It said it has continued to trade in line with expectations across all four business sectors, delivering encouraging revenue growth of 5.5% year-to-date and the pipeline of new business opportunities continues to increase.

Group revenue for Q3 was lower year-on-year by 1.4% against tough comparatives.

The group’s grocery & consumer sector fell by 7.0% whilst the general merchandise sector remained broadly flat (+0.6%), both in comparison to the record highs seen in the corresponding period last year.

Its eFulfilment sector revenue increased by 13.6% in the third quarter driven by new wins including The White Company, City Electrical Factors and Saint Gobain, where operations commenced earlier in the year.

While the performance in Cygnia remains “robust”, recent postal strikes and pressure on discretionary consumer spending meant that online volumes were below expectations for some customers.

Revenue from the public & industrial sector decreased by 5.8%, mainly due to lower volumes across the building materials market and contract attrition. However, this was partially offset by growth in our public sector businesses, which has increased year-on-year by 25.5% YTD.

It said that over the past nine months, the UK’s economic, political, and labour environments have been “particularly challenging”, impacting both top-line growth and its underlying cost base.

It said it expects these difficult conditions to continue into its 2024 financial year.

“Despite the volatility and headwinds in the external environment, our diversified customer base continues to offer resilience and the board expects the Group to report profit for the current year in line with market expectations,” it stated.

CEO James Wroath commented: “I would like to thank all my colleagues for their hard work and commitment, which has been so important to our performance over the festive period and throughout Q3 trading.

“We remain focussed on driving growth with both new and existing customers; our strong pipeline is critical to Wincanton’s ability to negate the challenging external environment that we are facing.

“We continue to make great strides in supporting our technology propositions for customers, including automation and robotics, and this is supporting strong operational delivery across the Group.”

Elsewhere in The Grocer this week, Japanese conglomerate Mitsubishi has hired advisors to explore a sale of ambient food giant Princes, which it has owned since 1989.

On the markets this morning, the FTSE 100 is up 0.6% to 7,838.9pts this morning.

Risers include Deliveroo, up 2.4% to 83.6p, THG, up 2.6% to 66.5p and Hilton Food Group, up 3.1% to 637p.

Fallers include FeverTree, down 5.3% to 1,026p, Virgin Wines, down 3.6% to 53p and Kerry Group, down 1.3% to €88.90.

Yesterday in the City

The FTSE 100 edged back 0.1% to 7,495.9pts yesterday.

Tesco and M&S posted strong Christmas trading numbers. Despite those figures having already been baked into recent share price rises, Tesco ended the day up just 1% to 246p and M&S up 1.3% to 145.3p.

Tesco meat packer Hilton Food Group jumped 12.8% to 618p after its own strong festive trading update.

Elsewhere Virgin Wines plunged 24.1% back to 55p after it said sales slowed down over the festive period.

The day’s risers included THG, up 8.3% to 64.8p, FeverTree, up 5.2% to 1,083p, Greencore, up 4.3% to 73.4p, C&C Group, up 3.8% to 183.8p and Ocado, up 3.5% to 757.8p.

Fallers yesterday included B&M European Value Retail, down 4.4% to 432p, Bakkavor, down 1.8% to 98.2p, Diageo, down 0.7% to 3,642p and Coca-Cola HBC, down 0.5% to 1,926.5p.

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