Market listing still on the cards for C&C

Drinks and snacks group C&C, which was forced to pull its planned flotation due to market turbulence last summer, has said it will seek a stock market listing again when conditions are right.

"We were not a bit happy about having to postpone the IPO [initial public offering] and I say postpone advisedly. I don't say abandon because we do intend to get back to the markets," chief executive Mr Maurice Pratt said yesterday.

Speaking after the group reported pre-tax profits of €87.5 million for the 18 months to the end of February, he said the decision to postpone the flotation at a cost of €8.5 million had been vindicated. However, he believes that a flotation remains the right option for C&C.

"We are owned by venture capitalists and their natural exit mechanism is through an IPO. There are other exit mechanisms but their view still remains that the most logical one for them would be a flotation.

"Firstly, we replace debt with equity and that provides us with more financial balance-sheet muscle to pursue an acquisition strategy overseas, particularly to add to our international spirits and liqueurs business which is what we would be keen to do.

"Floating would also give us an acquisition currency via paper so it gives us another string to our bow so there is a logic about it."

However, he noted that market conditions would have to be right for C&C to recommence the IPO process and that was not the case at present. "Clearly, that environment does not exist today and I cannot speculate when it might happen. It's not going to happen this quarter and you'd find it hard to see it happening next quarter but one genuinely doesn't know."

In the meantime, management is focused on keeping the company in good shape so it can take advantage of the opportunity to float when it arises. The group, which has changed its financial year-end to February so that it no longer coincides with its peak selling season, reported operating profits of €191 million for the 18-month period, down 3.5 per cent on an annualised basis.

Mr Pratt described the results as "a good set of numbers in an operating environment that's become very difficult and very challenging". In addition to the economic slowdown and a poor summer last year, the group also had to contend with a doubling of excise duty on its main product, cider, in the 2001 budget.

Although C&C absorbed half of that increase, at an estimated cost of €13.5 million last year, cider sales volumes fell by 11 per cent in the year to February having grown by 8 per cent per annum prior to that.

Mr Pratt said sales had recovered in the March to May quarter and its Bulmers brand was now back on "an even keel", delivering a flat performance year-on-year. Despite weak European markets, its international business posted 5 per cent volume growth.

Alcohol accounted for €848 million of group turnover of €1.2 billion in the 18-month period. The balance was accounted for by its snacks and soft drinks business, which suffered its first fall in a decade, down 2 per cent.

Net debt at the end of February stood at €715 million, down from €732 million at the end of August last year and is expected to fall by a further €50 million this year.