C&C's cider sales fizz after good weather but warns on Brexit vote impact

 
Francesca Washtell
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Magners sales fizzed in the previous quarter

Magners maker C&C posted a "solid start to the year" today but warned that its outlook is "cautious" following the surprise Brexit referendum result a fortnight ago.

The figures

Volume shipped by brand increased by a whopping 24 per cent for exports, while Magners also volume sales also grew by 24 per cent in the UK in the three months to 31 May.

Bulmers - Magners' branding in Ireland - volumes increased nine per cent, while Tennent's increased by four per cent in Ireland and five per cent in British markets, the company said in a trading update today.

Read more: Smirnoff has just made cider the new alcopop

In Ireland, "decent weather" in March and May gave the cider category, especially Bulmers, an early boost. The Corona brand also displayed "momentum", while C&C's wine portfolio and boutique beer brand also started to perform.

In afternoon trading, the company's share price was up more than three per cent to €3.59.

C&C C&C | mobile image

Why it's interesting

C&C has said it is on track to deliver more than 20 per cent sales volume growth for the 2017 financial year, through " a combination of organic growth and the impact of new distribution deals".

Read more: High duty rates help explain why the UK cider industry is under threat

The company's core export markets of Spain and Italy "look set for a decent year", though in the US the cider category remains in negative territory.

However, C&C warned the effects of the pro-Brexit referendum result are still uncertain and that currency movements have the potential to undo profits made so far this year. On the other hand, it also said its dual listings on the Irish and London Stock Exchanges provide the company "a degree of balance to the risks associated" with the decision to leave the EU.

What C&C said

In a statement, C&C said:

Despite the solid start, we remain cautious on our outlook for the year. The result of the referendum in the UK brings with it uncertainty, volatility and a lack of visibility.

Our Bulmers, Magners and Tennent's brands are strong and connect with local customers and consumers in our core markets.

We have a growing export business which is entirely unaffected by the UK decision to leave the EU and our conservative approach to currency risk covers most of our transaction exposure through natural hedging.

However, with almost 50 per cent of profits denominated in Sterling and reported in euros, C&C is exposed to the translation impact of a devalued pound. 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.

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