- The group has been hit hard by the closure of pubs and restaurants, which pushed it into a first half loss.
- It returned to profitability from July through September but said that October has been “challenged”.
It will come as little surprise that drinks maker C&C (CCR) has been squeezed by Covid-19 and the disruption to the hospitality industry. With the collapse in demand from the ‘on-trade’ channel – pubs, bars and restaurants – net revenue (which accounts for excise duties) more than halved in the six months to 31 August, to €387m (£349m).
The steep drop in sales meant that C&C swung to a €12m adjusted operating loss in the first half of the year – versus a €64m profit a year earlier – although it said that it turned a profit in July and August thanks to the gradual reopening of on-trade outlets post-lockdown. At the end of August, the group was trading with 78 per cent of outlets it had done business with a year earlier in Great Britain, compared to 47 per cent in Ireland.
Over in the off-trade segment, which sells to supermarkets and independent retailers, the shift to home consumption saw volumes in Ireland surge by almost half year-on-year. The group’s Tennent’s, Bulmers and Magners brands all increased their market share by volume.
Net debt has ticked up by 14 per cent from the February year-end position to €372m. This reflects a €36m working capital outflow as C&C pulled in less cash from its ‘receivables purchase programme’ – this entails selling its trade receivables to banks who then recoup the money owed by customers.
C&C remained profitable in September but said that October has been “challenged” by additional on-trade restrictions. The group has warned that its crucial Christmas trading period will likely be hit as well. House broker Numis anticipates an adjusted operating loss of €6m for the year to 28 February 2021, rebounding to a €86m profit in 2022. The outlook is highly uncertain and the recovery will likely be slow, but the group is sitting on €387m of liquidity, which should help it weather the storm. Hold.
Last IC View: Hold, 205p, 05 Jun 2020
C&C (CCR) | ||||
ORD PRICE: | 178p | MARKET VALUE: | £ 551m | |
TOUCH: | 177.8-178.2p | 12-MONTH HIGH: | 417p | LOW: 141p |
DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
NET ASSET VALUE: | 167p* | NET DEBT: | 72% |
Half-year to 31 Aug | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
2019 | 1.09 | 53.6 | 15.5 | 5.5 |
2020 | 0.54 | -32.4 | -10.4 | nil |
% change | -50 | - | - | - |
Ex-div: | na | |||
Payment: | na | |||
£1 = €1.09 *Includes €638m in intangible assets or 206¢ per share |