Tennent’s owner C&C finishes year on high as punters flock back to pubs

Tennent’s owner C&C Group has finished its financial year with a “robust return to trading”, driven by strong consumer demand.

Releasing a trading update, the Irish drinks firm noted that second-half operating profits had been impacted as a result of renewed government restrictions on the hospitality industry, particularly during the key festive trading period.

In January, however, restrictions in the company’s core markets of the UK and Ireland were eased and led to positive trading in the key on-trade market.

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It added: “We were back trading with 81 per cent of direct delivered outlets in February 2022 versus February 2020, with corresponding volumes at 68 per cent and momentum building as outlets continue to re-open.”

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

There was no brand breakdown provided in the update, but the firm also pointed to ongoing inflationary pressures and the measures it was taking to tackle them.

Bosses noted: “Our focus continues to be on ensuring that we provide market leading service for our brands and partnership brands to our customers as trading recovers.

“We are operating in an evolving inflationary cost environment, however we are afforded a degree of protection through our successfully executed €18 million (£15.1m) cost reduction plan, our recent price increases and input cost hedging.

“Over and above effective management of both operating and input costs, our well invested network and technology-led system continues to provide the platform for C&C to be the pre-eminent brand led drinks distributor in the UK and Ireland.”

The group, whose other brands include Magners cider and Heverlee lager, expects net debt to be about €263m at the end of the financial year, compared with €442m 12 months previously.

“This significant reduction in net debt, together with an improving business performance, will substantially enhance our financial flexibility and enable C&C to deliver our strategic objectives, to drive growth for C&C and returns for shareholders,” it added.

The group’s full-year results are due to be published on May 17.

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Greg Johnson, an analyst at brokerage Shore Capital, said: “The outturn for [the full year] was better than expected with operating profit expected to be in the range of €45-47m, which is better than our forecast of €43m and only modestly down on the €50-55m guided to back in October and prior to Omicron and the effective quasi-lockdown.

“In February, the group traded at 81 per cent of outlets compared to the corresponding month in 2020, with volumes at 68 per cent. Although this is down on the 89 per cent reported in September, we would expect this to improve as the trade continues to reopen.

“The statement also highlighted cost inflation continuing to be managed, with numerous degrees of protection afforded. The statement appears quietly confident on being able to pass on controllable costs, although Ukraine continues to drive higher input inflation, notably aluminium.”

Shore has a “hold” rating on the stock.

Analysts at Numis, which has a “buy” recommendation, said there were “clear strategic growth opportunities” in cider and premium beer as well as the scope to drive operational leverage from the firm’s distribution business.

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

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