Shares in C&C fell sharply on Friday after the drinks group said it would incur a one-off charge of €25 million related to the delayed implementation of a new business management system at one of its UK units.
The company behind Bulmers and Magners cider also announced that chief executive David Forde will step down after almost three years with the group’s chief financial officer Patrick McMahon taking over with “immediate effect”.
In a trading update, C&C said the implementation of an Enterprise Resource Planning (ERP) system at its recently acquired Matthew Clark and Bibendum wholesale business was taking longer than expected and would hit profitability.
‘Material impact’
“The implementation process has taken longer and been significantly more challenging and disruptive than originally envisaged, with a consequent material impact on service and profitability within MCB,” it said.
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The company said it expected a one-off impact of about €25 million associated with ERP system disruption in 2024, “reflecting the cost associated with restoring service levels and lost revenue”.
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The announcement triggered a near 17 per cent decline in C&C shares in London where it has its main listing. Shares were down 16.9 per cent at £1.27 by mid-morning.
In its trading update, the drinks group re-affirmed its earnings guidance given for the year, saying it expects to report an operating profit of €84 million.
“C&C’s strong free cash flow generation, together with increased balance sheet strength will also enable a re-instatement of dividend payments to shareholders, with respect to FY2023,” it said.
C&C also announced Mr Forde’s departure.
‘Smooth handover’
“The group announces that David Forde, having navigated C&C through the challenges of the Covid-19 pandemic, has informed the board that he wishes to step down as chief executive officer,” it said.
“He will cease to be a director with immediate effect but will be available to help ensure a smooth handover of responsibilities,” the company.
Current chairman Ralph Findlay has been appointed executive chair to support the management transition as Patrick McMahon will also retain his responsibilities as chief financial officer (CFO) until a new CFO is appointed, C&C said.
The process for this will start shortly, the company added.
In a statement, Mr Forde said it was a privilege to lead such a great business as C&C. “I am grateful to all C&C colleagues for their dedication, resilience and commitment in recent years,” he said.
