7th Jul 2016 07:17
LONDON (Alliance News) - C&C Group PLC on Thursday said it made a solid start to its financial year, but said it remains cautious on the outlook for the full year following the UK's decision to leave the European Union.
The Dublin-based maker of Bulmers and Magners said volume shipped by brand in the first quarter to May 31 improved considerably on last year. Bulmers volume grew by 9%, Tennent's (Ireland) was up 4%, Tennent's (GB) rose by 5%, Magners increased by 24% and export volume also grew by 24%.
C&C said decent weather in March and May in Ireland gave the cider category an early boost, benefiting the Bulmers brand, while there was also momentum in the Corona lager brand, wine portfolio and boutique beer range.
In Scotland, the licensed on-trade experienced a more stable start to 2016 following a very challenging 2015, with Tennent's beginning to recover some lost share in the first quarter.
Meanwhile, the recovery of Magners in the UK continued from the second half of financial 2016 into the first half of financial 2017.
Export is on track to deliver 20% volume growth in the full year through a combination of organic growth and new distribution deals, with the core export markets of Spain and Italy set for "a decent year", C&C said. In the US, however, the cider category remains in negative territory.
C&C added that the Euro 2016 football championship has been good for trade across Ireland since the quarter-end, anticipating a decent month for its brands in June. However, despite this, C&C said it remains cautious on the outlook for the full year following the EU referendum result.
"The result of the referendum in the UK brings with it uncertainty, volatility and a lack of visibility. Our Bulmers, Magners and Tennent's brands are strong and connect with local customers and consumers in our core markets. We have a growing export business which is entirely unaffected by the UK decision to leave the EU and our conservative approach to currency risk covers most of our transaction exposure through natural hedging," C&C said in a statement.
"However, with almost 50% of profits denominated in sterling and reported in euros, C&C is exposed to the translation impact of a devalued pound. At current levels, if sustained, currency movements have the potential to undo the earnings benefit from both cost reduction activity and the steady progress made in trading year-to-date," the company added.
"While the longer-term economic implications of the UK referendum outcome are uncertain, the fundamentals of our brands and business model remain strong, supported by a robust balance sheet and cash conversion capability," C&C concluded.
Shares in C&C were trading up 1.4% at EUR3.53 on Thursday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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