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C&C Group has delivered profits in line with expectations in the first half despite a washout summer driving down cider sales.
Underlying operating profits increased 29% to €40.3m in the six months to 31 August as the Tennent’s and Bulmers owner rebuilt profitability following a botched software upgrade last year.
The group said it was on track to achieve €80m of operating profits for the full year and retained its €100m target for FY27.
Revenues declined 3% in the period to €861.4m as a result of the disposal of the non-core soft drinks business in Ireland, lower contract brewing volumes and softer cider volumes in Great Britain.
The branded business reported a 9.1% fall in revenues in the half to €172.3m as Magners volumes sank 10%, which C&C attributed to a lack of sunshine over the summer. Beer consumption in the on-trade in Scotland was also hit by an exodus of 200,000 football fans to Germany for the Euro 2024 tournament.
One-off costs of €12.2m related to a restructuring of logistics and a group transformation pushed pre-tax profits down to €16.4m for the half, compared with €23.4m a year earlier.
C&C has faced pressure from activist investors this year after historic accounting errors came to light, which resulted in CEO Patrick McMahon standing down. The group continues to search for a new boss.
Chairman and interim CEO Ralph Findlay said he was “pleased” to report earning in-line with expectations as the group rebuild performance and momentum.
“Despite unfavourable summer weather, our brands demonstrated inherent appeal and resilience with both Tennent’s and Bulmers growing market share and Menabrea and Orchard Pig achieving double digit revenue growth.
“I am also encouraged that we achieved significant growth in distribution in Matthew Clark and Bibendum with customer numbers in August +10% vs the prior year. We continue to make improvements with regards to customer service, which underpins our customer acquisition strategy.
“As we enter the busy Christmas and New Year trading period, we are committed to delivering outstanding service, winning customers, continuing to simplify the business and to further improve operating efficiency.”
Shares in the group opened down 0.5% to 160.8p this morning.
Morning update
Food inflation has slowed in October, helping to ease pressure on shop prices generally, according to the latest data from the British Retail Consortium.
Prices in food increased 1.9% this month, compared with 2.3% in September, with fresh food inflation from from 1.5% to 1% and ambient at 3.1%, down from 3.1%.
Shop price deflation sat at 0.8% in October, down from 0.6% in September, the BRC-NielsenIQ index showed this morning.
BRC chief executive Helen Dickinson said meat, fish and tea prices all contributed to slowing inflation, with spooky deals for Halloween helped with confectionery prices.
Mike Watkins, NielsenIQ head of retailer and business insight, added: “Consumers remain uncertain about when and where to spend and with Christmas promotions now kicking in, competition for discretionary spend will intensify in both food and non-food retailing.”
Revenues at homeware supplier Ultimate Products fell 6.5% to £155.5m in the year to 31 July as supermarkets held back orders as a result of overstocking and weakened consumer demand.
The previous year was also boosted by shoppers picking up air fryers in a bid to reduce energy consumption at home.
However, international sales rose 7% to £54.3m in the year.
Adjusted EBITDA at the group declined 11% to £18m, while pre-tax profits slipped 10% to £14.3m.
CEO Andrew Gossage said it continued to be “a challenging period” for many consumer-facing businesses in the UK.
“Despite current headwinds, we remain cautiously optimistic for FY25 as a whole and as confident as ever in our medium-to-long term prospects,” he added.
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