C&C proposes €15m dividend as margins widen on price increases

C&C, the company behind Bulmers and Magners cider, has proposed a full-year dividend for the first time since 2020 after reporting sharp increases in revenue and profit for the year to the end of February.

The London-listed drinks group, which also owns the Five Lamps and Tennents lager brands, saw its operating margin widen by 1.6 percentage points last year to 5 per cent, driven largely by increases in sales volumes and the price of its products.

In Ireland, where group operating profits soared 48.7 per cent to €28.1 million, C&C said the introduction of minimum unit alcohol pricing, coupled with the removal of the remaining Covid-19 public-health restrictions last year, had “helped improve margins year on year”. This happened “despite the inflationary cost pressures” the business faced and a large, €6.1 million increase in group marketing investment.

“Increased investment behind the Bulmers brand continued and this year we achieved 40 weeks on air with our TV ad campaign, driving awareness and affinity for the brand with Irish consumers,” the group said. “In addition, the brand was showcased in a lighter tone of voice through a new TV campaign for Bulmers Light.”

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The volume of Bulmers sold in Ireland grew by 9.1 per cent, helped, the group said, by a 57.6 per cent growth in the on-trade in the aftermath of the pandemic.

Overall group operating profits jumped 75.6 per cent from 2022 to €84.1 million, with adjusted earnings before deductibles 46.7 per cent stronger at €79.5 million.

Patrick McMahon, who replaced David Forde as group chief executive earlier this month, said the results revealed “an improved performance against all financial measures”. He said: “Increased balance sheet strength and inherently strong free cash flow characteristics have enabled C&C to return capital to shareholders through the reinstatement of dividends.”

Against this backdrop, C&C’s board has recommended a full-year dividend of 3.79 cent per share, amounting to a total distribution of €15 million. It is the first time since the outbreak of the pandemic that the group has proposed a dividend and “reflects the directors’ confidence in the cash-generating capability of the business”, it said.

Looking ahead, C&C confirmed that it expects to take a “one-off” charge of €25 million in its next financial year related to the delayed implementation of a new business management system at one of its UK units. The group said last week that the implementation of an enterprise resource planning system at its recently acquired Matthew Clark and Bibendum wholesale business was taking longer than expected and would hit profitability.

“An improvement [in the system] through May 2023 is being achieved by investing in material additional cost and resources, in advance of a system fix being implemented to restore service to normal levels permanently,” the drinks group said on Wednesday.

On foot of the charge, it expects an increase in working capital in its 2024 financial year although it said group net debt and adjusted earnings are expected to remain within range.

Excluding the one-off charge, the board said C&C was “currently performing in line with management expectations” for its current financial year.