Tennent’s Lager owner C&C Group swings back to profit as the hospitality sector starts to recover and Sunak dishes out overhaul of alcohol duty
Upbeat: Tennent’s Lager maker C&C Group swung back to an operating profit in the six months to the end of 31 August
Tennent’s Lager maker C&C Group swung back to an operating profit in the six months to the end of 31 August.
The Dublin-based group, which also produces Magners Cider, now expects to remain in the green for the rest of the year as the hospitality sector ramps up its recovery.
Boss David Forde said the group had been able to avoid being hit hard by supply chain problems, rising CO2 prices and the HGV driver shortage.
He said: ‘We have been partly insulated from the on-going UK capacity constraints due to driver shortages through our network being owned and operated in-house, in addition to the advantages afforded by our leading scale and reach.’
The delivered 93 per cent of 2019 volumes in September, and expects to rake in an annual profit of between €50million to €55million.
With indoor and outdoor hospitality venues reopened amid the easing of lockdown restrictions, the group saw its net revenue jump by 65 per cent to €657.3million.
Shares in the drinks group jumped sharply and are currently up 4.01 per cent to 259.6p.
The company has introduced sweeping cost cuts that have enabled it to save €9million over the period. For the full year, cost cutting savings are expected to reach around €18million.
The group’s net debt and liquidity stood at €245.8million and €474.9million respectively at end of August.
Russell Pointon a director at Edison Group, said: ‘The full easing of restrictions across the UK and Ireland has been extremely welcomed by C&C Group, the leading soft and alcoholic drinks manufacturer, as it reported its results for the six months ending 31 August.
He added: ‘The company has also managed to circumvent the CO2 and HGV shortage thus far given its own CO2 recovery system and substantial internal network of drivers which has ensure a minimal disruption to its services. With these issues looking likely to continue into 2022, the company looks in a strong position to continue to capitalise.
‘In what has been a turbulent past 18 months for the company and industry, C&C has responded in these past six months to put it in good stead to continue this good form in the second half and with the cuts announced in yesterday’s budget yet another positive for the business.’
Patrick Higgins, equity analyst at Goodbody, said: ‘While the sector is clearly navigating a series of headwinds at present, C&C Group is among the operators that areconfidently manage their way through the present challenges and drawing on their operational strength.’
On Wednesday, Rishi Sunak told MPs in his Budget speech that duty rates for draught beer and cider would be cut by 5 per cent, taking 3p off a pint in a pub.
Taxes on sparkling wine and some lower-strength products will also be cut as part of a huge overhaul of the UK’s alcohol duty system.
Mr Sunak also said the planned increase in duty on spirits such as Scotch whisky, wine, cider and beer will be cancelled from midnight, which alone will represent a tax cut worth £3 billion.