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C&C hit by devaluation of sterling

By BFN News | 07:56 AM | Friday 10 March, 2017

C&C Group has warned that operating profits will be lower than last time and that it remains cautious on the outlook for its domestic markets. It said group operating profit for the year to the end of February was expected to be in the region of €94-€96m. Second half profit was broadly level year on year, despite the adverse impact of currency movements. The group said FY17 volume performance in the three principal brands of Bulmers, Magners and Tennent's was resilient and a significant improvement on FY16. A trading update said: "Bulmers is expected to post volume growth of +3% for the full year (FY16:-13%) and Magners +7% (FY16:-6%). "Tennent's volumes will be flat year on year (FY16:-4%) and growing share in the key independent free trade channel. "Niche & Speciality volume, including Heverlee, Menebrea and Chaplin & Cork's will be up 50%+ in the year and now constitutes 2% of Group owned brand volume." The group said the major factor in the decline of operating profit was the devaluation of sterling. It said the cost reduction plans announced in October 2015 completed as planned in the second half but the benefits were outweighed by incremental brand investment and price deflation attributable to changes in channel and pack mix across the group. The group said its wholesale business stabilised in the second half of the year but did not recover the margin losses. Looking ahead, the group said: "The volume performance of our core brands and our growing niche/speciality portfolio was robust in FY17, despite challenging trading conditions. "However, the impact of currency, negative market pressures on pricing and pack/channel mix have impacted the group's profitability. "In FY18 we will continue to invest in our core brands to deliver long term growth, remain disciplined on costs and look to strengthen our route-to-market where possible. "Given market dynamics and consumer concerns we remain cautious on the outlook for our domestic markets and are not anticipating improved trading conditions in the short term." Story provided by

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