'Modest growth' for core business at C&C
C&C Group today announced its results for the year ended February 28, 2015.
The Group manufactures Bulmers and Magners cider, as well as Tennent's and Clonmel 1650 beer brands. The Group’s Irish wholesaling subsidiary, Gleeson Group, manufactures Tipperary Water and Finches soft drinks.
The company announced operating profit of €115m, a decline of 9.2% but in line with stated guidance.
Net revenue increased by 10.3% to €683.9m.
“Challenging trading environments in C&C brands and in the US leading to a decline in profitability in both segments,” the company stated.
A one-off impairment charge of €150m to US asset value reflects the rebased profit level.
The company said that core segments of Ireland and Scotland performed well, with operating profit growth of 1.5% and 1.8% respectively.
The company is set to implement a final dividend increase of 22.8% to 7c per share.
“Our core businesses in Ireland and Scotland, which represent 86% of operating profit, delivered modest earnings growth during the year,” said C&C Group CEO Stephen Glancey.
“During the course of FY2015, we continued to make progress towards our objective of building leading brand-led distribution businesses in both of these regions. This model reinforces the sustainability of our earnings and cash generation capability which, in turn, drives our ability to create and sustain value for shareholders.
“Our integration with Gleeson in Ireland has now completed and we are making solid progress with Wallaces Express. In addition, we continue to invest behind our iconic Bulmers and Tennent’s brands.
“Outside of our core segments, we have been restructuring and investing behind our market positions and brands to drive performance. During the year, we have consolidated our C&C Brands business; accelerated our product investment and development in the US; and, made exciting progress in new international markets.
“Reflecting both the strength of our balance sheet and our free cash flow characteristics, we completed a €30m share buyback in FY2015. Today, we announce an increased final dividend consistent with our commitment to provide certainty of value in the form of a progressive dividend stream.
“The medium-term target is to increase the Group's payout ratio to closer to 50% of earnings.
“In parallel, our objective is to continue to invest in the business to build durable value.
“We will continue to evaluate the available range of capital allocation opportunities to drive improved returns. Absent any significant capital allocation decisions, and to improve capital efficiency, we expect to move to a higher leverage multiple by the end of our FY2018 fiscal year with a target of approximately 2 times net debt to EBITDA within this time frame.
“Operationally, FY2016 is a period of stabilisation and investment. We have made a decent start in the early part of the year.”
