Drinks manufacturer C&C Group reported a 2.7% fall in first-half operating profit as it warned of “intensively competitive trading” in England and Wales and a “disappointing” performance in the US.
The producer of Magners and Tennent’s saw net revenues rise by 9.3% to €368.1m, but experienced a 2.7% dip in operating profit to €69.2m.
The performance reflected earnings growth in its core businesses of Ireland and Scotland, but that was offset by weaker than expected trading in the US and England & Wales.
Stephen Glancey, C&C Group CEO, called the results “solid”, given the “lower expected contribution from the US and England & Wales businesses”.
The group stated: “H1 outcome represents a solid performance given tough prior year comparisons in Ireland, the early stage in our US marketing investment programme, and an intensively competitive trading environment in England & Wales.”
In Ireland & Scotland C&C Group said “excellent progress” had been made integrating its Gleesons and Wallaces acquisitions.
However, the company said that the cider category in England & Wales “remains highly competitive” and that the overall UK cider market remained challenging.
It said Magners underperformed the market in the first half and it saw only modest improvement in its Shepton Mallet division in volume and value.
As a consequence of these trading difficulties in England & Wales, the firm is reviewing the structure of its business in the region.
It said that its initial bid last week for Spirit Pub Company, which was rejected, was largely because its “route-to-market capability in Ireland & Scotland is not matched in England and Wales”.
Glancey commented: “Against this backdrop the group are of the view that our commercial interests could be materially enhanced through direct participation in the management of high-quality retail assets. Such models are well established in the UK and over time the combination of cash flow from branded alcohol together with excellent retail outlets have provided sustainable returns for shareholders.
“Such a combination would provide the group with the enhanced position in an important consumer market while offering a range of commercial options across all our domestic markets.”