C&C signals Irish price increase as it reports rise in revenue

Drinks group bounces back to profitability as hospitality sector reopens

C&C told its British customer base earlier this month that it was raising prices. Photograph: Bryan O’Brien

C&C told its British customer base earlier this month that it was raising prices. Photograph: Bryan O’Brien

 

Drinks company C&C, which owns Bulmers/Magners cider, has signalled that it may increase prices in the Republic after it pushed through 3.5 per cent price increase in the UK market.

The company, which on Thursday reported a return to profitability in its interim results, told its British customer base earlier this month that it was raising prices to cope with an increase in its cost base. Speaking to The Irish Times after the release of its results, chief executive David Forde indicated it plans to do the same in Ireland.

“We are definitely in an inflationary cycle. Oil and gas are rising and also aluminium. There is no doubt that prices are on the way up and we have to mitigate those inflationary pressures,” he said. “We’ve moved on prices in Britain and Northern Ireland. I imagine in the Republic we will look at it.”

C&C said it returned to profitability from June as the gradual reopening of the hospitality sector boosted net revenue.

Revenue rose 65 per cent to €657.3 million in the six months to the end of August, with its operating profit reaching €16 million in the first half despite some restrictions remaining. The results included furlough income and temporary salary reductions of €5.2 million, but furlough was discontinued in June when the business returned to profit.

Irish revenue

Net revenue in Ireland rose almost 26 per cent year on year to €115.1 million, with on-trade volume year-on-year growth accelerating in the second quarter as pubs reopened gradually. The group generated cost savings of €9 million in the first half of the year.

The group had a net debt and liquidity of €245.8 million and €474.9 million respectively at end of August, following a rights issue earlier in the period.

“We are encouraged by how quickly the on-trade recovered and we are pleased to report that trading in the first half has been ahead of plan,” said Mr Forde.

The company reinstated guidance on full-year operating profits, suggesting a range of €50 million to €55 million. Davy and Goodbody stockbrokers both raised their targets to €52.5 million.

“The results are a bit better than was externally expected,” said Mr Forde. “We were in far more uncertain times six months ago.”

He said he would not like to see a return to restrictions on pubs in Ireland or Britain as it would mean “going back to the dark world”. But if it happens, he says, the company is in a better position to cope.

C&C said it was somewhat insulated from the capacity constraints affecting the market in Britain, as it employed its own truck drivers. Mr Forde said it had taken “pickers from the factory floor, and taken them through their HGV training and trained them as full-time truck drivers”.

To ease supply issues in coming months, he said, it had already started making Christmas deliveries to some of its biggest multi-outlet customers in Britain. Mr Forde said some of the largest hotels in the UK were “sacrificing bedrooms to store banqueting wine stock”.

“I sense that people want to get out and enjoy this Christmas, in a way they didn’t get to enjoy it last year. I’d be reasonably optimistic of a normal Christmas trading,” he said.

Mr Forde also denied there was any “specific” review happening over its 47 per cent stake in the Admiral pub group in Britain, which it is reportedly considering selling.

“We review all of our investments on an ongoing basis. But at this moment, we are a strategic investor in Admiral and we support the management team there.”