C&C ‘materially impacted’ as it books €92.5m in exceptionals
Bulmers owner said no revenue has been generated from the on-trade since March
Photograph: Nick Bradshaw for the Irish Times
Bulmers-owner C&C Group said the Covid-19 crisis has “materially impacted” its business, with the shutdown of the hospitality sector meaning no revenue has been generated from on-trade venues since March.
Releasing its full year results for the year ended February 29th, the drinks maker and distributor said it has reallocated its resources to meet the “significant increase in demand through the off-trade channel”, adding that it has taken a series of exceptional charges to deal with the crisis.
C&C took an exceptional charge related to Covid-19 of €47.6 million. In addition,the company reviewed the recoverability of its debtor book and advances to customers and booked an expected credit loss provision of €19.4 million and €5.8 million respectively. It also booked a €10.6 million provision in respect of stock due to expire.
The company took a €34.1 million impairment on its Woodchuck suite of brands and noted an exceptional item of €4.4 million for the termination of a number of its long term apple contracts which were deemed surplus to requirements. Total exceptional items amounted to €92.5 million.
The sale of Bulmers fell 16 per cent in the on-trade in April and May while Tennent’s in Scotland was 42 per cent lower and Magners was down 7 per cent. In the off-trade, sales of Bulmers rose 62 per cent while Magners and Tennant’s were also up significantly.
“The ongoing closure of the hospitality sector has material implications for our business and earnings potential, with approximately 80 per cent of our revenue derived from the on-trade channel. An emerging trend from this shutdown however has been an immediate shift in consumption dynamics, resulting in increased demand in the off-trade channel,” said Stewart Gilliland, C&C Group’s interim executive chairman.
The group’s trading update contained its full-year results for the 12 months to February 29th showing it grew net revenue by 7.8 per cent to €1.7 billion and operating profit by 10.4 per cent to €116.4 million. The company had free cash flow of €136.5 million at the year end.
In Ireland, the company posted a rise in net revenue of 3.6 per cent to €227.7 million while operating profit grew marginally to €40.2 million. Bulmers saw its brand volumes down 6.6 per cent with revenues down 7.7 per cent while the company’s Five Lamps brand and distribution arm, C&C Gleeson, grew net revenue by 32.7 per cent and 5.3 per cent respectively. From July, C&C will have exclusive distribution rights for Budweiser in Ireland.
To deal with the ongoing crisis, C&C has furloughed about 70 per cent of employees and reduced salaries across its workforce by an average of 20 per cent. The company has fully drawn down its debt facilities, reduced capital and marketing investment and received confirmation from the Bank of England that it is eligible to issue commercial paper under a UK scheme should it require.
“Taken together, the Board believes that its existing liquidity position is more than sufficient for the Group’s current and expected needs.”
Given the high level of uncertainty, C&C has decided not to declare a final dividend for the current financial year.