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Brexit hits C&C's profits in H1

DBR Staff Writer Published 28 October 2016

Dublin-headquartered cider manufacturer C&C Group reported a 14.4% decline in its net revenue to €307m for the first half of this year, compared to €358.6m for the same period in 2015.

The company registered a 12.0% decrease in its operating profits to €55.1m, compared to €62.6m recorded in the first half of 2015.

C&C blamed the fall in sterling value post Brexit for having an adverse impact on its reported net revenue and operating profits.

C&C Group CEO Stephen Glancey said: “While reported earnings have been impacted by a combination of accelerated investment and currency we believe that this level of investment ultimately underpins long term brand values.”

As far as the main brands of C&C Group are concerned, Magners grew by 11%, Bulmers by 6% while Tennent’s was up by 2% in the first half of 2016.

The group’s portfolio of craft beers and ciders that includes Heverlee, Chaplin & Cork’s and Menabrea has done well, with a combined growth in volume by 24% in the first half.

C&C Group has also noted down a change in consumer demand to be an important factor affecting its revenue.

Glancey added: “In the first half we have seen some variability in consumer demand and are cautious on forward consumer reaction to political and economic conditions in our core markets.

“However, we have a business that is capable of weathering these challenges and our confidence in the medium to long term outlook is based on the strength of our key brands, our business model and leading positions in Ireland and Scotland – where fundamentals remain strong.”

The drinks company increased its dividend by 5% to 4.96 cent per share for the financial year ending 28 February 2017.

Despite the revenue decrease in the first half, C&C Group is optimistic about the second half which is likely to benefit from cost reduction plans, efficiency gains, increased marketing spend in first half along with possible Tennent’s growth in Scotland.

Image: C&C Group owned Bulmers cider factory - Clonmel, Ireland. Photo: courtesy of Dimod61 and Wikipedia.