C&C Group first-half profits rise despite lower revenue

(Sharecast News) - Alcoholic drinks group C&C reported higher profits despite a decline in revenues in the first half, as stronger branded drinks sales and cost controls helped offset weakness in its distribution business.

The company, which makes Bulmers, Magners and Tennent's, said net revenue fell 3% at constant currencies to �794.9m in the six months ended 31 August, while operating profit before exceptional items rose 4% to �43.4m.

Operating margin improved by 0.4 percentage points to 5.5%, while adjusted pre-tax profit increased 4% to �33.3m and adjusted earnings per share climbed 6% to 7.1cents.

Branded revenue grew 3.8% to �176.5m, supported by favourable summer weather, the FIFA World Cup, brand investment and the acquisition of Innis & Gunn. Branded operating profit increased 9.4% to �29.2m, lifting margins to 16.5%.

Distribution revenue declined 5.7% to �618.4m, reflecting the planned exit of lower-margin customers and continued pressure on hospitality outlets and wine and spirits sales. Distribution operating profit fell 6.6% to �14.2m, with margins unchanged at 2.3%.

Underlying free cash flow increased 18% to �36.9m, while leverage stood at 1.4 times. The interim dividend was set at 2.00cents per share, down from 2.08cents.

Chief executive Roger White said the group had delivered a solid first-half performance and was seeing early signs of improving momentum.

"The general economic environment remains volatile, and we have the important festive trading period yet to deliver. However, we have strong trading plans in place for the balance of the year alongside a number of brand initiatives and the delivery of our developing innovation agenda, all of which give us confidence in our ability to meet market expectations for the full-year," White said.

The group also reiterated its medium-term targets of �85m in operating profit by 2030 and cumulative free cash flow exceeding �100m between 2028 and 2030.

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