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Poor weather across Ireland in the key summer trading period has hit Magners, Gaymers and Bulmers maker C&C Group (CCR) with revenues and profits falling in its first half.
The group called the performance of the business in the six months ended 31 August “disappointing” as a challenging period in core markets of Ireland and Scotland pushed down operating profits 9.5% to €62.6m and sales 2.6% to €358.6m. The US business almost performed below expectations and C&C is taking action to improve earnings for the 2017 financial year.
On a constant currency basis, net revenue was down 12.3% and operating profit by 18.9%.
The cider producer also announced a new cost saving programme to deliver €1m in annualised savings and the launch of a €100m share buy-back programme.
The one bright spot in the interim results was significant growth in export business – 31% earnings growth fuelled by Magners, Tennent’s and Shepton brands – with expanding opportunity in new markets.
CEO Stephen Glancey said: “Our performance in the first half reflects difficult trading conditions in our core markets of Ireland and Scotland. Many of the factors contributing to this are one-off or transitional, including poor weather; the transition to a brand led wholesale model; and, legislative change in Scotland.
“In aggregate, the headwinds will adversely impact profitability by €10m in the financial year.”
He added: “We are assuming that market conditions will continue to be testing particularly in our core markets in the coming months but we are confident that we are taking the right actions to build durable, long-term value for all shareholders and this is reflected in a 5.1% increase in our interim dividend.”
Morning update
AB InBev and SABMiller (SAB) have asked the UK takeover panel to extend the ‘put up or shut up’ deadline for the £68bn deal until next week (4 November). The Budweiser owner has completed its due diligence review of SAB and reconfirmed the £44 a share offer. It has also agreed a massive debt package to finance the mega deal. However, the companies need more time to allow them to continue discussions with respect to other aspects of the transaction.
Rival brewer Heineken has revealed a strong third quarter with beer volumes growing organically by 5.4%, driven by Europe, Americas and Asia Pacific. The performance helped revenues rise 7.5% to €5.5bn (£4bn). Volumes in the premium segment were also up 3.9%, driven by Americas and Europe. Jean-François van Boxmeer, chairman of the executive board and CEO, said: “Our strong performance in the third quarter is consistent with our earlier 2015 FY guidance that volume would be weighted to the second half of the year. Heineken’s well-balanced global footprint, excellent portfolio of brands, including the recent addition of Red Stripe and partnership with Lagunitas, combined with a powerful innovation agenda are expected to continue to deliver positive top and bottom line growth.”
Walgreens Boots Alliance has agreed to takeover US rival Rite Aid in a $17.2bn (£11.2bn) all-cash deal to make the pharmacy giant even bigger. “Today’s announcement is another step in Walgreens Boots Alliance’s global development and continues our profitable growth strategy,” Walgreens Boots Alliance executive vice chairman and CEO Stefano Pessina said. “In both mature and newer markets across the world, our approach is to advance and broaden the delivery of retail health, wellbeing and beauty products and services.”
British American Tobacco (BATS) has said in a trading up date that it is on track for a good year. Revenues are up 4.2% in the year to date (nine months to end of September), but down 6.5% at current rates of exchange. CEO Nicandro Durante said: “The group continues to perform very well, with a strong third quarter. Our excellent market share growth was driven by the exceptional performance of our global drive brands whilst the increase in revenue, at constant rates of exchange, was due to strong pricing in the majority of our markets. Performance will moderate in the final quarter partly due to a strong comparator and the impact of the deterioration in exchange rates.”
Shares in the group leapt 6.8% to $95.16 on the NASDAQ on the back of the news.
Stevia producer PureCircle (PURE) has started trading on the main market of the London Stock Exchange this morning after applying to relist from AIM. Its shares are up 1.2% to 435p so far.
After falls of more than 2% yesterday C&C Group slipped a further 0.7% to €3.69 this morning after the disappointing first half. Despite applying for a PUSU extension, SAB’s shares have climbed 0.9% this morning to 3,951p and ABI was up 1.4% to €107.65. Heineken also enjoyed a share price rise of 3.8% to €83.20 and British American Tobacco was up 1.8% to 3,861p.
Yesterday in the City
The FTSE 100 slumped 0.8% to 6,365.3 points yesterday as investors stayed away ahead of the two-day US Federal Reserve meeting. Mining and energy stocks also weighed on the index.
Grocery and fmcg stocks were mostly in the red as trading closed, with Tesco (TSCO) leading the way down 2.8% to 185.2p. Booker (BOK), C&C Group (CCR) and Morrisons (MRW) also all came in more than 2% down at 185.4p, €3.72 and 172.4p respectively.
Elsewhere, Sainsbury’s (SBRY) slipped 1.6% to 266.9p and online rival Ocado (OCDO) lost more of the gains made from last week, falling 1.5% to 358.1p.
Meat producer Cranswick (CWK) took another 1.1% hit to 1,690p on the back of the WHO report labelling sausages, bacon and ham as cancer-causing.
Associated British Foods (ABF) was one of the FTSE 100’s biggest risers, with the share price up 0.9% to 3,424p, and McColl’s Retail Group (MCLS) made back some of last week’s losses to climb 2.7% to 150p.
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