C&C Group has reiterated its operating profit outlook for its current financial year, adding that its first-half earnings aligned with expectations.
The Bulmers' maker expects net revenues to decline 3% in the first half, while underlying operating profit is expected in the range of €39 million to €41 million, in line with expectations.
The growth in operating profit reflects the phased rebuilding of profitability in C&C Group's distribution business following last year's ERP disruption, the company noted.
Distribution Agreement
C&C Group has also announced a restructuring of its partnership with Budweiser Brewing Group, with the former resuming control and distribution of the group's cider portfolio, including Magners, in Great Britain.
The move will provide the company an opportunity to improve the performance of Magners, according to analysts at Shore Capital.
AB InBev will assume control and distribution of its beer portfolio in the off-trade segment in Ireland, on the same day.
First-Half Highlights
The Matthew Clark & Bibendum business saw 2% growth in net revenue, following recovery in distribution and implementation of efficiency initiatives.
In August, the division's distribution points increased by 10% compared to the same period last year.
Elsewhere, Tennent's achieved volume and value share growth over the latest 12 weeks, supported by targeted marketing campaigns around the Euro 2024 tournament.
Bulmers outperformed the cider market in Ireland despite mixed summer weather.
Premium beer and cider brands reported double-digit revenue growth, driven by the performance of Menabrea and Orchard Pig.
Outlook
C&C Group is confident in achieving its operating profit target for the current financial year, and making progress towards the target of €100 million by FY2027.
Despite challenging market conditions, it aims to continue focusing on improving efficiencies, simplification of its business, and gaining customers and distribution opportunities.
According to Shore Capital analysts, the delivery of the €100 million profit target would see the valuation fall to 6x EV/EBITDA over the medium term and an FCF (free cash flow) yield improving to high single digits.
'We see the first-half performance, especially given little help from the weather, as an encouraging step on this rebuild.'
