C&C shares fall on surprise move by chief executive

C&C MANAGEMENT yesterday insisted there would be no change of strategy at the company, after chief executive John Dunsmore announced he is to leave in December.

The surprise announcement sent C&C’s share price 7 per cent lower at one stage yesterday, overshadowing a solid set of first-half figures, which prompted the company to reiterate its full year guidance of operating profit in the range of €108 million and €115 million.

Mr Dunsmore, one of the C&C management trio credited with turning around the ailing drinks business since joining three years ago, will be replaced by chief operating officer and finance director Stephen Glancey.

Kenny Neison will become the group’s new finance director.

Mr Dunsmore will retain his shareholding in the company, which currently stands at around 2 per cent.

The company is expected to appoint a senior executive to take over the running of the UK side of the business, a division traditionally handled by Mr Dunsmore.

Speaking to investors following the publication of the results, Mr Dunsmore stressed the collective approach of the three senior executives to the company to date. He said the company’s strategic focus on international expansion would continue under Mr Glancey, who has overseen the development of C&C’s international business.

The Dublin-based drinks company yesterday reported a 7.8 per cent increase in operating profit to €67.4 million, despite continuing pressure on sales.

Revenue declined by 5.3 per cent to €268.7 million, though this was offset by an improvement in operating margin which was up 3.1 percentage points to 25.1 per cent.

Mr Dunsmore described the second quarter as a “tough quarter for the trade” with June figures suffering on a year-by-year basis because of the soccer World Cup boost to trade in June 2010, and bad weather affecting sales this July and August.

Sales of Magners grew by 4.9 per cent, though this was primarily driven by a 22.7 per cent growth in Magners exports, particularly in Australia and the US, with sales of Magners in the UK 2.9 per cent higher, a lower increase than had been expected.

A decline in cider sales in Ireland – Bulmers volume was down 3.5 per cent – was offset by a greater contribution from beer sales.

The company is planning to expand the international sales of Tennants, Mr Glancey said yesterday, with 10 per cent of Tennant’s total volume now sold in Ireland.

The company’s strong cash position was noted by analysts. C&C had a net cash surplus of €59.7 million, leaving the company “in a position to capitalise on opportunities that might emerge”, Mr Dunsmore said yesterday.

C&C closed yesterday in Dublin at €2.725, a decline of just over 4 per cent.