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Supermarket pressures are reducing C&C's fizz

The cider and beer maker is feeling the pinch from the war between the major supermarkets
October 27, 2016

The fallout from supermarkets' price competition and simplification programmes dragged on cider and beer maker C&C (CCR) in the first half, with several of its weaker brands delisted. This combined with beer and cider price deflation, and the desire for cheaper aluminium packaging, to hurt C&C's brands division, which focuses on England and Wales. Constant-currency operating profit here fell 41 per cent to €4.4m (£3.9m), due to lower prices and volumes.

IC TIP: Buy at 352€

Ireland, C&C's largest region by sales, registered flat operating profit at €29.8m, whereas Scotland's fell nearly 10 per cent to €17.9m. Larger quantities of its key Bulmers brand were sold in Ireland but some share was ceded in draught cider. In the off-trade, which includes sales to supermarkets, it retained a price premium for Bulmers compared with rival brands but this narrowed in the half. It was also tough in Scotland as competition and pricing pressures remained ramped-up, with the industry struggling with the structural alcohol decline linked to new drink-drive limits imposed in Scotland in December 2014.

Prior to these results, analysts at Davy expected pre-tax profit of €95.5m in the year to February 2017, leading to EPS of 26.5¢ (from €56.3m and 14.4¢ FY2016).

C&C (CCR)
ORD PRICE:352¢MARKET VALUE:€1.1bn
TOUCH:352-354¢12-MONTH HIGH:424¢LOW: 338¢
DIVIDEND YIELD:4.0%PE RATIO:24
NET ASSET VALUE:202¢NET DEBT:24%

Half-year to 31 AugTurnover (€m)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (¢)
201651452.713.74.73
201745050.313.84.96
% change-12-5+1+5

Ex-div: 3 Nov

Payment: 16 Dec

*Includes intangible assets of €631m, or 200¢ a share