C&C revenue dips as pandemic restrictions depress key markets

Drinks group C&C said revenue fell 56 per cent year-on-year amid the ongoing coronavirus pandemic as restrictions to curb the virus spread led to the closure of on-trade in key markets.

The group announced on Wednesday that it was planning a rights issue to raise more than £150 million, the proceeds of which would be used to reduce the group’s leverage and manage near-term trading uncertainty.

The Bulmers owner said net revenue was €736.9 million in the year ended February 28th, 2021, with an operating loss of €59.6 million. The British market declined 36.4 per cent to €206.8 million, while the Irish market fell 26.6 per cent to €166.1 million

The group’s off-trade was marked by a 14.2 per cent growth for the year.

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The pandemic also led to exceptional charges being incurred, including impairment of equity accounted investments, stock write-off costs, costs relating to covenant waivers and other costs relating directly to the pandemic.

Restructuring costs were offset partially by profit from divestment of a non-core asset.

The group negotiated temporary extensions to supplier-payment terms and agreed temporary deferrals with the United Kingdom and Irish tax authorities valued at €77.4 million at end February 2021. More than €38.6 million is payable in the first half of fiscal year 2022.

The group also completed a €140 million US private placement in March 2020 and extended the repayment period of a €105 million term loan.

Optimistic chief executive

Group chief executive David Forde said the year had presented an extraordinary set of circumstances.

“With approximately 80 per cent of C&C’s pre Covid-19 net revenue derived from the hospitality sector, the pandemic has had an unprecedented impact on the group,” he said.

“Our business model was proven during [financial year] 2021 as, during the periods of on-trade restrictions easing, we returned to profit and cash generation . . . We will build on this as the hospitality sector reopens, targeting cider share growth and building our share in premium beer which we continue to see as a significant market opportunity.”

C&C said it returned to profitability and underlying cash generation as on-trade restrictions were eased in July, August and September 2020.

“We are confident in our business model and strategy for growth,” said Mr Forde. “ Today we have also announced a rights issue to raise gross proceeds of approximately £151 million which will strengthen the balance sheet and ensure C&C is in a stronger position to achieve sustained growth and pursue its strategy as the hospitality sector emerges from the pandemic.”

He said the group was looking to the new fiscal year with optimism.