The C&C Group has reported a strong performance from Magners in Great Britain in the three months to the end of November, with a 5.8% increase in volume and a 7.8% increase in net revenue.
The company’s interim management statement also reports continued momentum in Magners exports (sales outside Ireland and the UK) in the three months to 30 November, with a 31.9% increase in volume delivering 25.3% growth in the nine-month period; and a robust performance for Tennent’s brand in the key Scottish independent free trade channel and overall operating margin improving, despite reported decline in nett revenue.
However the company says that Bulmers nett revenue remains under pressure from a weak on-trade and an increase in promotional pricing in the Irish off-trade.
C&C have reported an improvement in trading in Ireland and the UK during the Christmas period; and operating profit guidance of approximately €110 million for the full year, within the previously guided range.
“The strength of C&C’s business model, despite a challenging economic backdrop, should deliver solid earnings growth in the current financial year. Operating profit is currently expected to be circa €110m for the full year in line with the Group’s stated guidance.
Nett cash flow in the second half of the year is anticipated to be effectively neutral after absorbing the cash payment for the Hornsby’s business in November 2011. However, the Group reported strong free cash flow in the first half of the year and has a strong balance sheet”, the statement continued.
The company says that the on-trade channel in the Republic of Ireland remains very challenging, while long alcoholic drinks sales through the off-trade continue to grow. “Bulmers volume performance reflects this trend, with off-trade growth of 2.1% and an on-trade decline of 11.5% in the three months to 30 November. Of the total Bulmers volume shipped in the quarter, the off-trade channel accounted for 51%. Significant price-led promotional activity in the off-trade continues to impact nett revenue.
Despite the challenging top line in cider, earnings contribution from the Irish business in this financial year is expected to be broadly in line with last year. Trading in December was more robust than the previous three months.
Growth trends in the C&C beer portfolio continued in the quarter, with good momentum in the Tennent’s brand in both channels of trade. In November the Bulmers Specials range was launched in Ireland, bringing further innovation into the cider category”, the statement added.