British acquisitions add €6.3m to C&C profits

THE BRITISH businesses bought by Bulmers cider maker C&C contributed €6.3 million to profits last year, the company said yesterday.

C&C said revenues grew 16.4 per cent to €568.8 million in the 12 months to the end of February – its financial year end – while operating profits fell almost 11 per cent to €89.5 million. Pre-tax profits rose by just under 2 per cent to €82.3 million.

The company’s shareholders will next month vote on a proposal to sell its spirits business – which includes the Tullamore Dew, Irish Mist and Carolan’s brands – to Scottish operator William Grant for €295 million.

The sale will be the third substantial deal done by C&C over the last year. It bought the Tennent’s business in Scotland and English cider producer, Gaymers, for a total of €268.6 million.

According to the figures released yesterday by C&C, Tennent’s added €7 million to operating profits last year while Gaymers delivered a €700,000 loss, leaving the company with an overall gain of €6.3 million from the two deals.

The spirits division sale will leave it with €25 million in cash net of last year’s purchases, according to chief executive John Dunsmore.

C&C has already indicated that it intends using the entire proceeds of the sale to pay off part of its debts – net borrowings were €365 million at the end of February – and to invest in the development of its cider and beer businesses.

Mr Dunsmore pointed out yesterday that the price offered by William Grant for the spirits business comes to 18 times its 2010 earnings before interest, tax and write-offs.

The equivalent earnings figure for the business last year was €17 million.

Once the business is sold, 81 per cent of C&C’s revenues will come from Bulmers (known as Magners in Britain) and Tennent’s, with the balance coming from Gaymers.

The balance of revenues and volume production will have shifted from Ireland to Britain. However, Mr Dunsmore pointed out that the Bulmers business, in Clonmel, Co Tipperary, was four times as profitable as Gaymers.

He added that while the company could never say never, its management was “focusing on running a strong international business that is based out of Ireland”.

In 2009, the group focused on arresting the decline in cider sales, which had fallen 14 per cent the previous year.

That had stabilised at 2.4 per cent. It has clawed back market share in Britain, where poor summers and increased competition lost it a lot of ground.

It cut 154 jobs from its operations in Clonmel and cut and froze wages in different areas of the business.

This saved €5 million last year and will cut costs by €13 million a year. The restructuring cost it €159.6 million.

The group intends paying full year dividends of 6 cents a share, a fall of 33.3 per cent on last year.

C&C: 2010 results

Turnover:€568.8m (+16.4%)

Pretax profit:€82.3m (+2%)

Earnings per share:23.2 cents

Dividend per share:6 cents (-33%)

SUMMARY

Two acquisitions and a proposed sale of its spirits business will leave the company focused entirely on producing and selling beer and cider.

Sales last year increased 16 per cent to almost €570 million, while Tennent's, the Scottish brewer it bought from AB Inbev, added €7 million to the operating bottom line.

The next major step for C&C is the sale of the business that includes brands such as Tullamore Dew whiskey and Irish Mist liqueur to Scottish distiller, William Grant, for €300 million.