C&C Records 55.4% Decline In Net Revenue

By Dave Simpson
C&C Records 55.4% Decline In Net Revenue

Bulmers cider manufacturer C&C Group has published its unaudited results for the six months that ended on August 31, 2020, revealing that the firm's net revenue declined by 55.4% to €386.7 million, which resulted in an operating loss of €11.7 million.

Meanwhile, the group's off-trade revenue grew by 15.6% during the period compared to prior year; its free cash flow outflow was limited to €28.4 million pre-exceptionals as a result of cost control measures and reductions in capital investment, marketing investment and working capital management; and its net debt increased from €326.9 million, as at February 29, 2020, to €371.6 million (€233.6 million to €287 million excluding IFRS16), with a €36 million working capital outflow attributable to the phasing of the group's debtor securitisation facility.

C&C's had cash on hand/RCF headroom of €415 million at the end of August, excluding its unutilised debtor securitisation facility and any available short-term funding through the COVID Corporate Financing Facility (CCFF).

The group's current liquidity excluding debtor securitisation and CCFF, as of October 20, is €387 million.

C&C said that its liquidity position remains robust and the group has begun to take action to permanently right-size its fixed cost base.


C&C also said that while September continued a return to profitability for the group, October is challenging due to further on-trade restrictions in both Ireland and the UK, and the near term outlook for the on-trade sector remains challenging and uncertain, with the key Christmas trading period likely to be impacted by continuing restrictions across the hospitality industry.

C&C noted, however, that the off-trade channel is performing strongly and continuing to benefit from a temporary shift in consumption dynamics.

The group added that it has Brexit plans readied for a potential no trade deal exit outcome on December 31, 2020.

Interim Executive Chairman Statement

C&C Group interim executive chairman Stewart Gilliland stated, "Driven by strong demand in the off-trade and the gradual reopening of the on-trade in our core markets, the business returned to profit generation in July through to September. The outbreak of COVID-19 coincided with our financial year end and has meant that the entire six month performance being reported [here] was impacted. Although we expect the pace of recovery will continue to vary, as the largest independent alcohol distributor across the UK and Ireland, our business is structurally integral to the markets we serve. Our near term focus is securing our position and enhancing the performance of the business while positioning C&C to deliver for customers and shareholders over the long term.

"Throughout COVID-19, our priority has, and continues to be, the health and well-being of our people, customers, suppliers, business partners and local communities. Thanks to the collective work of our colleagues and suppliers, together with the extensive measures we have implemented in all our offices, depots and production facilities, the group's supply chain and production have not been impacted. We continue to support the hospitality sector on measures to facilitate reopening in line with government guidelines and public health advice.


"It is encouraging to see the business return to profit alongside the reopening of the on-trade in July. Our core local brands, Bulmers, Magners and Tennent's, have demonstrated the inherent strength of their customer appeal, winning market share in the off-trade channel over the past six months. However, the outlook for the on-trade sector remains challenging with limited near-term visibility.

"We expect to see reduced volumes in the on-trade continue for the near term partially offset by increases in the off-trade. We are adapting to this temporary change in consumption dynamics and, whilst it will invariably reduce short term profitability, we fundamentally believe in the medium and long term outlook for the on-trade channel. The scale, reach and customer focus of the group's brand-led distribution model should, in time, enable us to translate any improvement within this channel into superior profitability.

"Importantly, in terms of ensuring the group's ability to trade effectively through this extraordinary period, we have enhanced our liquidity position, diversified our sources of funding, and extended our borrowing facilities while reducing operating costs and maximising available cash flow.

"We remain confident in the inherent strength of our local brands, our unparalleled route to market and the medium to long term prospects for C&C."

© 2020 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.