C&C expects profit growth despite poor cider sales
DRINKS MANUFACTURER C&C expects to deliver earnings growth this year even though poor weather dampened cider sales in the first quarter.
The group anticipates a full-year operating profit of €112 to €118 million for its 2012/2013 financial year. This compares with €111.2 million in the previous year.
“The strength of our performance should enable us to deliver continued earnings growth for the current financial year,” chairman Sir Brian Stewart told shareholders at the company’s agm yesterday.
The first quarter proved very volatile in the Irish market, with cider volumes shrinking 5.4 per cent, and net revenues down 11.5 per cent.
Group chief executive Stephen Glancey said the Irish market remained quite difficult as it was “hugely deflationary” and consumer confidence was low, “but we recognise that we have a very, very strong business in Ireland”.
Mr Glancey said the group expected to “hold earnings flat” in Ireland this year. Despite the challenges in the market, he said the group would invest in Ireland “if we saw opportunities arising”.
“Ireland is the heart of business,” he added.
The chairman announced a final dividend of 4.5 cents a share, bringing the total dividend for the year to 8.17 cents.
Although this represented an increase of 24 per cent, there were rumblings of discontent among the shareholders present. One shareholder wondered how the board could call its dividend policy progressive when the share dividend remained so low.
“Our intention is to increase dividends broadly in line with earnings growth,” Mr Stewart said.
Chief financial officer Kenny Neison said he recognised the dividend level was at the lower end of the spectrum and “quite safe”, but that it reflected the conditions in which the company was operating.
Another shareholder asked the board whether it has any intention of leaving the Irish Stock Exchange in favour of a sole listing on the London market. Mr Stewart said CC was keeping this issue under review but at the moment had no intentions of any such move.
C&C’s performance in the British market was also weak in the first quarter.
However, the lacklustre start in Ireland and Britain in terms of cider volumes was somewhat offset by a strong performance in exports and the group’s Tennent’s beer brand.