C&C shares rise as Bulmers owner returns to profit despite Covid impact
Shares of cider owner Bulmers C&C jumped more than 10% on the beverage group, signaling a return to full-year profitability and its ability to weather inflationary cost pressures.
The group – which also owns Magners cider and beer brands Five Lamps and Tennent’s – is due to release its annual figures, for the 12 months to the end of February, in May.
In a business update ahead of those results, C&C said it now expects to report annual operating profits of between 45 million and 47 million euros.
This result would show a significant recovery from the height of the Covid lockdown period.
In the 12 months to the end of February 2021, the group posted a loss of almost 60 million euros, compared to a profit of almost 120 million euros for the 12 months immediately preceding the installation of the pandemic.
However, C&C’s earnings outlook for its final year is weaker than expected as the second half of the year was negatively impacted by new government restrictions on the hospitality industry at the end of 2021.
In October, C&C said it expected operating profit for the full year to be between 50 million and 55 million euros.
However, in January it delayed issuing a formal full-year earnings forecast, citing the impact of the latest Covid restrictions.
In its new update, C&C said it was happy with its “positive” trading levels, in bars, pubs and hotels, since restrictions were eased in January and is back with 81% of the points sales delivered straight from early 2020 levels.
Noting the inflationary pressures, C&C said that while it operates in “an evolving inflationary cost environment”, it enjoys “some protection” through its 18 million euro cost reduction plan, recent price increases and covering input costs.
Despite the stock surge, C&C stock is still down about 10% so far this year and nearly 25% over the past 12 months.
Over the past five years, the stock has fallen 40%. The drinks group also said it expects its net debt to be around 263 million euros.
This should be compared to €442 million at the end of the previous financial year.
“This significant reduction in net debt, coupled with improved business performance, will significantly improve our financial flexibility and enable C&C to achieve our strategic objectives,” he said.