Tennent's owner C&C back in profit after locked-down drinkers return to pubs

Tennent’s owner C&C Group said it would “remain vigilant” amid the current driver shortage crisis as it returned to profit in the first half.

Releasing an update for the six months to the end of August, the Irish drinks firm flagged strong trading, driven by the gradual easing of on-trade restrictions since April and boosted further by a “summer of good weather”, the Euros football championship and a boom in staycations.

Group net revenue in the first half is expected to be €657 million (£560m), compared with €398m a year earlier amid the initial lockdown, and €896m in the first half of 2019, pre-Covid.

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Operating profit for the interim period is expected to be €16m, compared to a loss of €12m a year earlier.

Tennent's, which is brewed in Glasgow, is Scotland's biggest selling lager brand. Picture: Andy Buchanan

The group told investors: “With the gradual easing of restrictions in the UK on-trade from April 2021, the group returned to profit and underlying cash generation in May 2021, demonstrating the inherent strength of C&C’s business model.

“Trading performance continued to improve from May 2021 and Irish outdoor hospitality reopened from June 2021.

“Our key distribution businesses, Matthew Clark and Bibendum, returned to profitability in June and remained profitable over the key summer trading period.”

The firm, whose other brands include Magners cider and Heverlee lager, noted that it had discontinued the use of government furlough support schemes in June.

It added: “As widely publicised, the UK is experiencing a shortage of heavy goods vehicle drivers, however, with the group’s distribution network controlled inhouse, we have been partly insulated and as a consequence have broadly met customer demand through the peak summer trading period.

“We continue to work closely with our partners to meet the resurgence in demand. The group is committed to market leading customer service and is taking steps to create capacity and continue to fulfil demand, however, we remain vigilant on the evolving situation.”

The group is set to announce its detailed first-half results on October 28 at which time it intends to reinstate guidance.

Chief executive David Forde said: “Despite sector challenges, our business has shown its inherent strength and cash generation capability in the first half.

“As the on-trade has progressively re-opened, we returned to profitability and worked closely with our customers to meet the resurgence in consumer demand.

“We continue to invest in our brands, most notably with the recent launch of multi-channel advertising campaigns for our iconic Tennent’s, Bulmers and Magners brands.”

Greg Johnson, an analyst at brokerage Shore Capital, noted: “C&C has issued an encouraging update, which has seen a strong return to trading as on-trade restrictions have eased since April and further benefits from staycations, weather and the Euros.

“Encouragingly, the group has returned to profitability in the first half, ahead of our expectations, and a marked reduction in debt since the year-end.”

He added: “Although the eventual size of the on-trade market remains uncertain, we see longer-term opportunities for market share gains and the potential to use its balance sheet and distribution capabilities to broaden its branded portfolio.”

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