Euros and weather help C&C group growth - but Brexit warning issued

The Irish-based drinks manufacturer and distributor of Bulmers, Magners and Tennent's reported growth across it's core markets but said Brexit would deliver 'uncertainty, volatility and a lack of visibility'.

The group said the European football championships had helped the trade, but the result of the EU referendum meant the group was 'cautious' in its future outlook - although it reiterated the strength of its core brands. 

The group's statement said: "We have a growing export business which is entirely unaffected by the UK decision to leave the EU and our conservative approach to currency risk covers most of our transaction exposure through natural hedging. However, with almost 50% of profits denominated in Sterling and reported in Euros, C&C is exposed to the translation impact of a devalued Pound.

"At current levels, if sustained, currency movements have the potential to undo the earnings benefit from both cost reduction activity and the steady progress made in trading year-to-date."

While the longer-term economic implications of the UK referendum outcome are uncertain, the fundamentals of our brands and business model remain strong, supported by a robust balance sheet and cash conversion capability.

We are an Irish domiciled business with a dual listing on the Irish and London Stock Exchanges. This together with our focused operating model helps to provide a degree of balance to the risks associated with the UK’s decision to leave the EU.

Core market results were:

• Bulmers +9%
• Tennent’s (Ireland) +4%
• Tennent’s (GB) +5%
• Magners (GB) +24%
• Export +24%

The cider category benefited from good spring weather - and the group also said there was 'momentum' in the Corona brand, its wine portfolio and boutique beer range across Ireland with Heverlee and Clonmel 1650 were up 67% and 65% respectively in the on-trade in Northern Ireland.

Tennent's was recovering in Scotland after what the group described as a 'very challenging year' in 2015.

The recovery of the Magners brand across the UK continued with the group hoping its recently completed repackaging of the brand, should ensure momentum continues into the second half of the year. At the premium end, Menabrea grew 88% in the on-trade in England and Wales.