ii view: cider maker C&C Group resets strategy

Full-year results to 28 February

• Revenue down 5.7% to €1.57 billion (£1.37 billion)
• Operating profit before exceptional items down 6.6% to €70.5 million (£61.3 million)
• Final dividend of 3.67 Euro cents per share
• Total dividend for the year 5.75 Euro cents per share, down from 6.13 Euro cents last year
• Net debt excluding leases up 50% to €121 million

Chief executive Roger White said:

“We have made demonstrable progress in multiple areas across the Group in the past 12 months and now have a more stable operating platform from which to build.

"Having established the best route forward for C&C Group to create value and having done much of the preliminary enabling work required, we now look forward with a renewed focus and drive to deliver the necessary change and improvements we have identified to support our value creation ambitions.

"We will continue to develop the growing C&C Brands portfolio, with our brand innovation pipeline now firmly established. We anticipate a series of exciting brand initiatives and a strong promotional programme across the key summer months.

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ii round-up:

C&C Group today detailed lower annual profits but with the drinks maker and distributor highlighting a push towards a strategy offering increased business "optionality and flexibility".

Tough hospitality industry conditions and loss of Budweiser volumes in the Republic of Ireland left revenue for the year to late February down 5.7% at €1.57 billion (£1.37 billion). Net revenue growth at its core Bulmers and Tennent's brands helped limit the drop in operating profit before exceptional items to 6.6% at €70.5 million.

Shares in the FTSE 250 company rose 1.5% in UK trading having come into these latest results down by close to a fifth so far in 2026. That’s similar to UK pub group Wetherspoon (J D). The FTSE 250 is up by almost 2% year-to-date.

As well as making drinks including Magners and Blackthorn, the Dublin headquartered company is also a leading distributor of beverages to the UK hospitality sector via its Matthew Clark Bibendum (MCB) business. 

An operating profit margin of 4.5% for the year was down from 4.4% last year, affected by reduced operating leverage or revenues and product mix challenges for MCB.

Group strategy will move away from its previous 'One C&C' focus towards two distinct operating models via C&C Brands and MCB.

Management is now adopting a growth focus for C&C Brands and margin recovery push for MCB. A further strategy update is planned at its Capital Markets Day in September.

A final dividend of 3.67 euro cents per share is payable to eligible shareholders on 17 July 2026. The payment, along with the previously paid interim dividend of 2.08 cents, gives a total annual payment of 5.75 cents per share. That’s down from the prior year’s 6.13 cents.

Group net debt excluding leases of €121 million is up from the prior year's €81 million, making for a net debt-to-adjusted profit leverage ratio of 1.6 times.

A first-half trading update is likely to be announced mid-September.

ii view:

C&C’s well-known drink brands sit alongside craft ciders and beers such as Orchard Pig, Menabrea and Clonmel Irish larger. Drinks profits totalled 72% of the company’s total during this latest financial year, with distribution the balance of 28%. Geographically, the UK made most sales at 85%, followed by Ireland at 14%, and other countries and including the US at 1%.  

For investors, product mix challenges for distribution were caused by an increased consumer preference for so-called long alcoholic drinks, which diluted margins, plus higher pub prices, which left MCB profits down by just over a third. The impact of the weather on sales cannot be ignored. Previous operational challenges have included a new computer system and the pandemic, while C&C lacks the geographical diversity of sales found at rival drink makers such as Diageo.  

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To the upside, a change of strategy to focus on two separate areas could see opportunity for a business sale increase. Strong core brands were underlined by increased revenues for core labels over this latest year. Group initiatives include operational simplification and cost discipline, while group net debt excluding leases of €121 million is comfortably below a stock market value of €460 million.

In all, the highly challenging backdrop for the hospitality industry continues to warrant caution. That said, ongoing management initiatives and a forecast dividend yield above 4% may interest speculative investors.

Positives:

• Strong brand names
• Diversity of operations

Negatives:

• Uncertain economic outlook
• Exposure to fuel prices given distribution and brewing

The average rating of stock market analysts:

Buy