Irish drinks firm C&C Group has posted a 3.2% increase in net revenue, to €1.57 billion, in its full-year results, boosted by the acquisition of the Matthew Clark and Bibendum businesses last year.
Commenting on the businesses' performance, Stephen Glancey, the group's chief executive, described full-year 2019 as a "transformational year for the company. Despite strong multi-beverage brand-led positions in Ireland and Scotland, access to the wider UK on-trade had always been a challenge.
"The acquisition of Matthew Clark and Bibendum changes this dynamic," Glancey added.
Here's how leading industry analysts viewed its performance:
Cathal Kenny, Davy
"C&C’s FY2019 result was in line with forecasts, both at a divisional and group level. C&C enters FY2020 in good health, with the benefits of its evolving downstream strategy starting to accrue. Its outlook statement strikes an upbeat tone, reflecting platform relevancy and associated capabilities.
"Double-digit EPS growth is targeted in FY2020 with mid- to high single-digit EPS growth thereafter. Earnings growth will coexist alongside strong cash generation. We anticipate a 4-5% upgrade for FY2020 and FY2021. The shares remain undervalued."
Darren McKinley, Cantor Fitzgerald
"Since recommending C&C as an outperform in January, expecting investor sentiment to improve as the MCB integration progressed, C&C shares are up 25%, and it will also go ex-dividend of [approximately] 3% next Thursday. Our investment case has played out, with C&C reporting a robust return to earnings growth and a much-better-than-expected outlook, driven by MCB synergies.
"We expect consensus to revise earnings estimates higher over the course of the next three to six months, supporting further gains. We raise our December year end fair value from €3.65 to €3.95, and we see justification for a re-rating in shares to the top of its trading range. Given the reduced upside post rally in shares, we would look for levels of €3.50 or better to buy C&C shares if clients have not yet participated."
Patrick Higgins, Goodbody
"In terms of outlook, management note that, despite the current geopolitical uncertainty and challenging weather-related prior-year comparative, it anticipates double-digit EPS growth in FY20 – GBY +13% – with MC&B particularly strong.
"Thereafter, it anticipates mid- to high single-digit annual EPS growth – GBY 7.5% FY21 – assuming ‘steady-state’ market conditions. Overall, we consider today’s update as positive and look forward to this afternoon’s CMD, which should provide more detail on the group’s strategy, particularly for MC&B."
Investec
"C&C issued solid FY19A numbers, reporting a 20.9% increase in adjusted EPS, to 26.6c – INVe 26.4c, consensus 26.0c – from a 21.5% increase in operating profit, to €104.5 million – INVe €103.9 million, consensus €105.4 million – Table 1. Net revenue increased to €1.57 billion – INVe €1.72 billion – primarily on the Matthew Clark Bibendum – MCB – contribution.
"Operating margin was marginally ahead of guidance – 1.55% versus 'below' 1.5%. Management notes that the plan now is 'to steadily restore the equity value, rather than chase short-term growth or synergy,' where value and earnings from a low cost base will take priority. In October 2018, a normalised EBIT margin target of between 2.0% and 2.5% was guided.
"With the businesses moving from the 'Stabilisation' to the 'Simplification and Optimisation' phase of the recovery programme, management has upgraded the mid-term operating margin target to 3.0%+. With our FY21E margin at 2.7%, the risk to forecasts is, again, to the upside."
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
