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C&C Group shares rally as drink-at-home business partially offsets impact of pub closures for cider maker

The Bulmers, Magners and Tennant's brands have all seen a significant increase in 'off-trade' sales whilst the pubs were closed for the pandemic.

C&C Group PLC - C&C Group shares rally as drink-at-home business partially offsets impact of pub closures for cider maker

Shares in C&C Group PLC (LON:CCR) rallied amid a surge in drink-at-home business which has only partially offset the shutdown of the Magners and Bulmers owner’s primary sales channel due to coronavirus (COVID-19) lockdown.

The closure of the hospitality industry during the pandemic has left the ‘on-trade’ channel – basically pubs, restaurants and hotels – without any revenue since March. Ordinarily, this market segment accounts for 80% of the Irish drinks company’s sales.

Off-trade sales for cider brands Bulmers and Magners at the same time spiked 62% and 25% respectively, while Scotland’s Tennant’s saw a 41% jump in off-trade sales.

“To capitalise on this behavioural shift, we have reallocated resources behind our Take-Home proposition and seek to optimise our business model in this channel,” said Stewart Gilliland, C&C interim executive chairman.

C&C shares gained 5.7% to 209.5p in Wednesday morning’s dealings.

READ: Berenberg upgrades C&C to ‘hold’ from ‘sell’

Overall sales for three flagship brands were, however, down 16%, 7% and 42% respectively.

Pre-lockdown, meanwhile, financial results for the year ended February 28 included €92.5mln of exception items as earnings (adjusted EBITDA) came in at €131.9mln, up 9%.

Revenue for the year were up 7.8% at around €1.72bn with the performance of flagship brands Bulmers, Magners and Tennant’s described as “resilient”.

C&C chair Gilliland noted that the closure of ‘on-trade’ customers has material implications for our business and earnings potential in the current financial year.

The company revealed it is burning around €7mln per month as pubs and restaurants remain closed, and that’s net of €5mln worth of employee furloughs.

The company noted that it has €550mln of liquidity and its debtor securitisation facility is currently 36% utilised. Its finances were bolstered by a €140mln US private placement back in March – amid what the company describe as a diversification, strengthening and extension of its capital structure and debt finance.

“We entered this crisis with a robust balance sheet and have further strengthened that position with additional liquidity enhancing actions,” Gilliland added.

“The board believes that its existing liquidity position is more than sufficient for the Group’s current and expected needs.”

Quick facts: C&C Group PLC

Price: 226.5 GBX

Market: LSE
Market Cap: £703.55 m

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