13th May 2015 08:31
LONDON (Alliance News) - C&C Group PLC Wednesday reported a pretax loss in its recently ended financial year as it made investments in the US and was hit by challenging trading conditions.
The drinks company, which produces brands including Bulmers, Magners and Gaymers ciders, reported a pretax loss for the year ended February 28 of EUR67.8 million, compared with a pretax profit of EUR95.5 million the year before, despite an increase in revenue to EUR986.5 million from EUR912.9 million.
C&C said it was hit by an impairment charge of EUR150 million relating to investments in the US, combined with volume decline and loss of a major packaging contract, while it also experienced a challenging trading environment for C&C Brands.
C&C Brands has faced "intense competition" as off-trade retailers fight for market share, and this, coupled with brand proliferation and range extensions on the supply side has led to a deflationary pricing environment and a squeeze on established brands, the company said.
"The US asset is well invested, however, and as the competitive landscape stabilises any uplift in volume will flow through to bottom line profitability," C&C said.
Its core businesses in Ireland and Scotland, which represent 86% of operating profit, delivered "modest" earnings growth, as C&C said its integration of Irish beverage wholesaler Gleeson has had a mixed year, but it made "solid progress" with integrating Scottish wine and spirit wholesaler Wallaces Express.
Despite its loss, C&C said it will pay a full-year dividend of 11.5 cents, up 15% from the year before.
"The medium term target is to increase the group's payout ratio to closer to 50% of earnings. In parallel, our objective is to continue to invest in the business to build durable value. We will continue to evaluate the available range of capital allocation opportunities to drive improved returns. Absent any significant capital allocation decisions, and to improve capital efficiency, we expect to move to a higher leverage multiple by the end of our FY2018 fiscal year with a target of approximately 2 times net debt to [earnings before interest, taxation, depreciation and amortisation] within this time frame," Chief Executive Stephen Glancey said in a statement.
"Operationally, [financial year] 2016 is a period of stabilisation and investment. We have made a decent start in the early part of the year,? Glancey added.
Shares in C&C were trading up 1.0% at 3.51 pence Wednesday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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