C&C marks losses over €129m US writedown and weak pound
Cider and beer maker reports €72.9m net loss for year to February
Cider and beer maker C&C: Operating profit declined to €95 million from €103.2 million for the previous financial year. Photograph: Bryan O’Brien
Cider and beer maker C&C swung into a net loss for the year to February as it wrote down the value of its US business by €129 million and grappled with sterling weakness as a result of the Brexit referendum.
The group reported a net loss of €72.9 million for the financial year compared to a profit of €47.4 million for previous 12 months.
C&C’s North American revenues slumped by 33.6 per cent during the year to €24.5 million on a constant-currency basis in a difficult US cider market and as the company dealt with “inevitable disruption” as it entered a deal with Pabst Brewery Company, the largest privately-held brewer in the US, to sell its cider brands.
The €129 million charge marks the second time C&C has been forced to make a major writedown of assets in the US, a market it entered in 2012 with the €235 million purchase of Vermont Hard Cider. In May 2015 it took a €150 million impairment charge against the US assets. Following the latest writedown, the carrying value of the Vermont business is €45 million.
“The near-term volatility in the category pushes out the prospects of Pabst being able to deliver a meaningful recovery in the short- to medium-term,” C&C said. “While there is no loss of belief or enthusiasm for the long-term prospects of cider in the US, or in the quality of the Vermont assets, we have prudently decided to review the carrying values of our US businesses.”
The group’s net revenue declined by 15.6 per cent for the year to €559.5 million, reflecting the euro’s strength against sterling following the Brexit vote, a drop in US revenues and weakness in its wholesale business.
Volume growth in core brands – Bulmers, Magners and Tennents – was 2.6 per cent for the year.
Chief executive Stephen Glancy said that while the current financial year has “started in line with expectations, we do remain cautious given the outlook for the consumer across our brands”.
“Political uncertainty continues into the current year, making forward predictions on trading patterns and consumer behaviour particularly challenging,” he said.
Cathal Kenny, an analyst with Davy in Dublin, said C&C’s results were in line with expectations.
“In a challenging market, C&C’s core brands delivered a credible performance with volume growth of 2.6 per cent,” he said.