C&C sales fall below €800m as distribution business contracts

Bulmers owner C&C Group increased sales of its own brands in the first half, but a decline in distribution revenue contributed to group sales falling below €800 million for the six-month period.

A new trading update from the company said group net revenue fell 3 per cent to €794.9 million for the half-year that ended in August.

During the period, branded revenue grew by 3 per cent due to “momentum in Tennent’s and Bulmers” sales, favourable summer weather and a boost linked to the Fifa World Cup.

Distribution revenue fell 4 per cent as a result of C&C Group’s planned exit from some lower-margin customer business and “continued pressure” on certain drinks categories.

C&C’s operating profit rose 4 per cent to €43.4 million despite the decline in revenue, while the group reported underlying free cash flow was up 18 per cent to €36.9 million, compared to €31.2 million for the same period last year.

Chief executive Roger White said the results reflected “a solid first-half financial performance”.

“The general economic environment remains volatile, and we have the important festive trading period yet to deliver,” White said.

“However, we have strong trading plans in place for the balance of the year alongside a number of brand initiatives and the delivery of our developing innovation agenda, all of which give us confidence in our ability to meet market expectations for the full year.”

A note in the financial update on the Irish market said consumers in Ireland were “continuing to balance cost-of-living pressures against a desire to maintain social and leisure occasions”.

It said positive weather in the summer supported its trading performance in Irish pubs, bars and restaurants, particularly within long alcoholic drinks categories like spirits.

“Consumer sentiment showed signs of gradual improvement despite ongoing pressure on household finances,” it added.

Sales in Irish supermarkets “remained competitive” as retail demand for C&C brands benefited from increased in-home consumption.

Davy analyst Cathal Kenny said the drinks group’s results suggest the business “remains on track to meet full-year market expectations”.

He said the key positive indicator was a better-than-expected sequential recovery in distribution margins, which remained flat at 2.3 per cent in the period, compared with 0.7 per cent in the second half of the previous financial year.