Irish alcohol producer C&C – maker of Magners and Bulmers cider – has seen its revenues decline 10.5 per cent to €257.5m (£237.8m) for the six months to the end of August, the firm announced today.
Pre-tax operating profit for the period, before exceptional items, was €57.4m (£52.8m) – two per cent lower on the previous six months and 14 per cent down on the corresponding time frame in 2008.
The falls were mostly caused by a 15 per cent decline in the company’s spirits and liqueurs volumes. Cider volumes were level with Magners’ growth in Northern Ireland and to a lesser extent other world markets offsetting a two per cent decline in the rest of Britain.
Despite the fall in revenues overall, C&C said it has increased its free cash flow during the six month period from €47.0m to €53.4m because of low capital expenditure and improved working capital.
Cost saving initiatives embarked upon by the company this year include reducing its stock holding as well as making 120 staff redundant and implementing a pay freeze for remaining employees.
“Following a positive start to the first half, trading conditions in August and September have been more challenging,” said C&C boss John Dunsmore. “However, we remain on track to deliver on the objective of stabilised volumes and a full year operating profit outcome in line with our stated guidance.”
C&C completed a deal to buy the Irish, Northern Irish & Scottish businesses of AB InBev in a deal worth £205m (€180m) at the end of last month. The acquisition means the company now owns Tennent’s – the best selling lager in Scotland – and has the rights to distribute Stella and Becks in Scotland and Ireland. It also now owns the Wellpark Brewery in Glasgow where Tennent’s is produiced.
The deal is “an evolution of our stated strategy,” according to Dunsmore, the former boss of brewer Scottish & Newcastle, who joined C&C as chief executive late last year.
“Tennent’s is a celebrated brand and is a compelling strategic fit for the Group to develop alongside Magners in Scotland and Northern Ireland” he said. “The acquisition presents a great opportunity to strengthen our route to market and broaden our product portfolio by combining our cider brands with some of the world’s leading beer brands.”
He said the company will now ascertain which areas its €8m marketing budget can yield the biggest returns.