SHARES in drinks firm C&C Group rose as it hiked its first-half operating profit by 9.2 per cent to €63.8 million amid a resilient performance by Tennent’s Lager.
C&C hailed the performance against tough comparatives with last year, including a warmer summer and the football World Cup in Russia.
The company said it was “pleased” with its Scottish results, which had been affected by minimum unit pricing changes.
The firm said Tennent’s volumes “remained resilient” in the unaudited update for the six months ended August 31, 2019.
READ MORE: Tennent’s owner moves stock market listing to London
Volumes for the brand in Scotland were down 4.9%, but net revenues were 2.5% “as a result of optimising pricing yields as well as a more favourable volume mix”.
This included sales of Tennent’s in Scotland through Matthew Clark. Net Great Britain revenues were €874.9m, up 13.5%.
C&C said: “The brand health scores remain at all-time highs and we have momentum on customer recruitment in the critical independent free-trade.
“We have also launched our direct to store distribution business and are making good progress.”
READ MORE: Tennent’s chief hails impact of major acquisition
Jonny Catto, of C&C, said: “We are pleased with the progress in the first six months. It has provided momentum towards our full-year targets.
“In Scotland, Tennent’s performed well, especially against the comparatives of last year, and revenue was slightly up.
“There was also a bit of distortion with MUP. There was an extra two months of minimum unit pricing last year so we were still having the effects of that, so we are pleased with Tennent’s.
“We launched the Because Life is Bigger Than Beer sustainability campaign which is a €16m commitment and as part of that we are promising to eradicate single use plastic by 2021 in Scotland and also to be carbon neutral by 2025.”
The weather hit the wider cider market which was down 9.2%, while Magners and Bulmers maker C&C was down 2.5%.
Mr Catto said: “Cider is synonymous with sunshine, and when the sunshine goes away people tend to move back to beer.”
READ MORE: Tennent's eyes post-Brexit brewing opportunity
The firm is prepared for Brexit but would prefer greater political certainty.
Mr Catto said: “It looks like we are closer to a General Election.
“We’ve had contingency plans for a while now [for Brexit]. It would be good to get a decision on it so we can have clarity either way.
“We have production assets in Ireland and Scotland so we are positioned well.
“In raw materials 100% of our barley is Scottish barley and we source the water from Loch Katrine so we are okay and in Ireland all our apples come from Ireland.
“It is probably more about stock building but at this time of the year we anticipate a stock-build in the run up to Christmas.”
READ MORE: Tennent's Brewery: From brewing by the burn to beer tourism hotspot
The company said Tennent’s volumes through the Great Britain segment were down 6% on the prior period.
Stephen Glancey, C&C Group chief executive, said: “We are pleased with the progress of the business over the first half of the financial year with revenue growth of 13.5% and operating profits ahead by 9.2%.
“Last year was exceptional with a World Cup and a hot summer boosting demand. Despite challenging year-on-year comparatives we have delivered a resilient revenue performance in our core brands.”
He also said: “Despite the economic uncertainties linked to macro and political issues, current trading is in line with expectations.
“Accordingly, we remain on track to deliver double digit EPS growth in 2020 and on our steady state forward earnings targets.
“We have significant balance sheet strength to support our targeted growth range. C&C is committed to effective capital allocation and progressive capital returns. In the first half of the year, we have invested €3.5m in a range of business return projects.
“We have also bought back three million shares and are proposing an interim dividend of 5.50c representing an increase of 3.2%.”
Ireland-based C&C said: “The combined beer and cider markets in GB fell by 3.5% in the six months.”
Investec said “despite difficult comps C&C reported very solid interim results”, echoing that the on-trade channel “faced a particularly challenging comparatives”.
Mr Catto said: “We are pleased across all the business units.”
Shares were up 3% to 374p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here