Based on these first-half results from beer and cider company, C&C (CCR), management's decision to spend $305m (£191m) expanding the international business - through the acquisition of US player Vermont Hard Cider Company - looks understandable. Indeed, trading in the core UK and Irish markets has been dismal as tough economic conditions, combined with torrid weather, delivered a substantial profit slide.
Profits fell 19.8 per cent in Ireland to €21.9m (£17.8m), while UK cider profits dropped 15.7 per cent to €19.9m. By contrast, the international division increased volumes by 52.9 per cent and profits here rose 10.5 per cent to €4.2m. Meanwhile, the Tennent's beer brand in the UK increased profits by 31 per cent to €16.1m.
On a constant currency basis, operating profit fell 6 per cent to €69.8m. Cash generation was also unimpressive with only 29.2 per cent of free cash flow converted to cash profits. So the Vermont Hard Cider Company deal, to exploit fast growth in US cider consumption, has been welcomed in the City. However, the price, representing 20 times this year's expected cash profits, looks high and competition in the US is set to increase.
Prior to these figures, broker Goodbody was forecasting full-year EPS of 29.5¢ (from 27.6¢ previously).
| C&C (CCR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 393¢ | MARKET VALUE: | €1.3bn | |
| TOUCH: | 392-393¢ | 12-MONTH HIGH: | 411¢ | LOW: 265¢ |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 221¢* | NET CASH: | €79.6m | |
| Half-year to 31 Aug | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 399 | 59.7 | 15.8 | 3.67 |
| 2012 | 397 | 63.7 | 16.5 | 4.00 |
| % change | -1 | +7 | +4 | +9 |
Ex-div: 31 Oct Payment: 17 Dec *Includes intangible assets of €493m, or 145¢ a share £=€1.23 | ||||
