Magners producer C&C Group saw group net revenue fall 6.9% to €559.5m for the year to 28 February with net revenue from core brands down 2.1%.
Volume growth in these core brands - Bulmers, Magners, Tennent’s – was 2.6% with the group’s premium and craft portfolio up 60%.
Operating profit of €95.0m was in line with the prior year and the group said it was growing in the second half on a constant currency basis.
The company reported a significant increase in brand investment - up 12% across its core brands.
C&C chief executive Stephen Glancey said: “FY2017 has been a period of significant activity for the group. While trading remained tough, we invested in and delivered volume growth across our core brands; completed a major rationalisation of our production foot print; drove efficiencies across the business; continued to grow our premium portfolio and export business; and secured an important new long-term distribution arrangement with AB InBev. After this year of consolidation, we are in materially better shape to meet the ongoing challenges and opportunities within our industry.
“The impact of the devaluation of sterling following the Brexit vote had a material (€8 million) negative impact on the group’s reported numbers. However, on a constant currency basis, the group returned to operating profit growth in the second half and was flat year-on-year at €95 million. The results reflect the increased investment behind our core brands, which returned to volume growth of 2.6% and the €15 million efficiency benefits arising from our production rationalisation programme.
“The double-digit volume momentum behind the Magners brand in the UK provided the right foundation to extend our distribution partnership with AB InBev. The rationale for expanding the relationship is compelling for both parties, allowing each other to play to our route to market strengths, backed by a combined high quality beer & cider portfolio. This partnership has the potential to drive volume and value in Magners for years to come as the category rationalises and distribution synergies are delivered.
“We made further progress during the year in growing and developing our portfolio of Premium and Craft beers and ciders. Heverlee, our authentic Belgian lager, grew +41% to over 20kHL and is now the fastest growing World beer in Scotland and the No.#1 import lager in Northern Ireland(vii). We launched Pabst into the Millennial market in GB and Menabrea, our authentic Italian imported lager, secured UK-wide listings with major supermarket and casual dining groups. Our investment partnerships with some of the most exciting craft breweries across the UK and Ireland, such as Five Lamps in Dublin, Whitewater in Northern Ireland and Drygate in Glasgow, all had a good year.
“FY2018 has started in line with expectations but we do remain cautious given the outlook for the consumer across our markets. Political uncertainty continues into the current year making forward predictions on trading patterns and consumer behaviour particularly challenging. However, our core brands of Bulmers, Magners and Tennent’s are well positioned to convert their volume momentum in FY2017 into revenue and value growth in FY2018. Our increase of €4 million in investment behind the Bulmers brand and NPD in Ireland is on-track. We have commenced our planning for Brexit, particularly in respect of trading on both sides and across the border in Ireland. A lot of uncertainties remain, but we are encouraged by the initial determination on both sides to minimise the potential economic and political friction of a hard land border on the Island of Ireland.
“C&C is a resilient business with strong local brands that have stood the test of time and a growing Premium and Craft portfolio. We are confident that the combination of our strong market positions, wellinvested brands, flexible low cost production assets and expanded partnership arrangements will deliver value for shareholders over the longer term. Our balance sheet remains strong at 1.55x Net Debt(vi)/EBITDA(ii) and we anticipate moving towards our medium term target of 2.0x during FY2018 through a combination of acquisitions and/or share buybacks.”