C&C Group issue Interim Management Statement
C&C Group plc, a manufacturer, marketer and distributor of branded cider, beer, wine and soft drinks today issued an Interim Management Statement covering the period from March, 1 2015 to present.
According to the statement, trading conditions in the first quarter were mixed. The Group’s core markets of Ireland and Scotland were impacted by unseasonably cold and wet weather, particularly in May.
The recent tightening of ‘drink- driving’ regulation in Scotland was attributed as having contributed to the challenges already faced by the on-premise channel, with rural and community pubs being disproportionately affected.
Whilst the weak trading environment and the final phase of Wallaces integration in Scotland may mean a short term trading dip in C&C's core markets, they claim that they will continue to invest for the long term.
Cost savings are being used to support incremental marketing spend and the new campaigns.
Once complete, the transformation in the business models will provide an improved platform for modest earnings growth and enhanced cash generation.
C&C Brands in England & Wales had a positive first quarter, trading in line with expectations. Good progress has reportedly been made on right sizing the business, and the savings generated provide room to support a more stable market share performance from their core cider brands.
In the US, first quarter shipments were up year-on-year, albeit against soft prior year comparisons. Woodchuck depletions remain negative but the recently launched Gumption brand has performed strongly with distribution and rate of sale ahead of plan.
The US cider category remains highly attractive and the Group is firmly committed to capitalising on its long-term growth potential.
The Export segment enjoyed a good start to the year with solid performances in Asia, Australia and Europe.
New market opportunities in Africa and Eastern Europe for beer and cider brands, are presently in various stages of development. Outside of core domestic markets, growth in the cider category continues to illustrate its long term credentials.
C&C's balance sheet has reportedly remained strong and there have been no significant changes to the financial position of the Group since FY2015 results were issued on May, 13 2015.
Outlook FY2016 is a year of stabilisation and investment for the Group. Following weaker than expected trading conditions in the first quarter, they anticipate a gradual improvement in core market performance as the year progresses.
In the US and other Export markets, a return to growth is the target. For C&C brands, the objective for the financial year is earnings and volume stabilisation.
C&C claim that their asset base is well invested, the balance sheet strong and cash generation robust. Free cash flow as a percentage of EBITDA should be within the normalised 60% to 70% range for the year.
