With sterling slumping to 31-year lows in the wake of the Brexit vote, Dublin-based C&C Group said it was exposed to the impact of a devalued pound, as almost half of its profits are denominated in the British currency and reported in euros.
It said: “At current levels, if sustained, currency movements have the potential to undo the earnings benefit from both cost-reduction activity and the steady progress made in trading year-to-date.”
The warning came as C&C said it had made a “solid” start to its new financial year, with volumes of Tennent’s in Great Britain up 5 per cent in the three months to the end of May, and 4 per cent higher in its home market.
“After a very challenging year in 2015, the licensed on-trade in Scotland is experiencing a more stable start to 2016,” the group said in today’s trading update.
“Tennent’s began to recover some lost share in the independent free trade in the first quarter. Volumes in the Heverlee and Menabrea brands in the on-trade in Scotland were up 31 per cent and 123 per cent respectively. For the Scottish business, a key area of focus for the remainder of the year is recovering some lost ground in wholesale.”
C&C also said that the European Championships in France had been good for trading across Ireland. The national team were knocked out by hosts France on 26 June, the day after Wales ended Northern Ireland’s dreams of reaching the quarter-finals.
The brewer added: “While the longer-term economic implications of the UK referendum outcome are uncertain, the fundamentals of our brands and business model remain strong, supported by a robust balance sheet and cash-conversion capability.
“We are an Irish-domiciled business with a dual listing on the Irish and London Stock Exchanges. This, together with our focused operating model, helps to provide a degree of balance to the risks associated with the UK’s decision to leave the EU.”