€100m buyback soothes C&C shareholders after earnings drop

Management at Bulmers/Magners cidermaker C&C has predicted its performance in its core Irish and Scottish markets will improve in the second half of the year after posting a 9.5 per cent drop in earnings in results for the six months to the end of August.

The company blamed increased competition, poor weather and transitional costs related to an overhaul of parts of its business for the decline in its performance, which saw sales drop 2.6 per cent to €359 million.

The company’s sales came under pressure across Ireland, Britain and the US, where it owns the Vermont Hard Cider company. C&C’s exporting division, however, performed strongly over the six months, with revenues up a fifth to €13.2 million.

Despite the challenging results, which were well flagged, the company’s shareholders will have been partly assuaged by the announcement of a €100 million share buyback between now and next July.

A return of cash to shareholders has been a key demand of activist US shareholder Orange Capital, which wants C&C to abandon its international expansion, including in the difficult US market, and focus on its core markets.

However, Stephen Glancey and Kenny Neison, C&C's chief executive and chief financial officer, both indicated in a briefing yesterday that the company remained committed to the US.

They also indicated it was still prepared to make an acquisition to beef up its challenged English and Welsh operation if an opportunity presented itself. If this were to happen it would represent a rebuff for Orange, which did not comment yesterday. “We are well positioned in Ireland and the UK to pick up assets that might become available as other brewers consolidate,” said Mr Glancey.

C&C has previously shown interest in buying a pub group to beef up distribution in England. Mr Glancey said it remained interested in suitable opportunities across the UK if the price was right. “It could be brands, it could be distribution,” he said.

Mr Neison said he felt the share buyback was currently a good use of C&C’s resources given its share price, but added that C&C was not looking to drive up the share price indefinitely in this manner. “If the share price rose again we would look at other ways to deploy our capital.”

The company also announced a €15 million cost-savings scheme.