Profit warning knocks the fizz out of C&C’s results

Last week’s full-year results from Bulmers cider owner C&C were left in the shade, overshadowed by a profit warning issued earlier in the month,which outlined how they would incur a one-off charge of €25m caused by delays in the implementation of a new business management system.

During a call with analysts, the company outlined more details about the costly issues with its new Enterprise Resource Planning (ERP) upgrade, which turned out to be “significantly more challenging and disruptive than originally envisaged”.

Analysts were told last week that C&C Group businesses Matthew Clark and Bibendum were operating on different platforms from the rest of the group – a legacy from their acquisition.

“The first step of this transformation programme is to harmonise our systems and ERP platform to address the weaknesses in our system security and remove old legacy systems – which as well as generating potential security concerns are cumbersome, expensive, and complex to maintain,” said Patrick McMahon, C&C’s new CEO and acting chief financial officer.

“The current implementation we’re undertaking will enable us to address these issues, together with harmonising some of our core processes, which in turn will drive greater efficiency for us in time. Once we have stabilised the systems, and we will, we can then start to consider how we can exploit the significant efficiencies such platforms offer us.”

Laurence Whyatt, head of European beverages research at Barclays, asked how the company could be confident that the cost would be no more than €25m.

McMahon said the estimate was at the upper end of the range.

In the analysts call, management was asked about a 72pc increase in overall marketing spend.

In relation to Ireland, the company said: “Increased investment behind the Bulmers brand continued. This year we achieved 40 weeks on air with our TV ad campaign, driving awareness and affinity for the brand with Irish consumers.

“In addition, the brand was showcased in a lighter tone of voice through a new TV campaign for Bulmers Light.

“To expand beyond our heartland summer occasion, sustainability and Christmas campaigns were launched, and Bulmers was centre-stage at many live events in the summer events calendar.

“Our investments are bearing fruit as the brand finishes the year in strong brand health and market share growth.”

McMahon said the company had underinvested in its brands for a considerable period of time.

He said it was encouraging that C&C had grown volume for all its key brands.

“Tennent’s up 4pc, Bulmers up 9pc, et cetera. We’ve also grown marketshare for those brands.”

The company said it wasn’t in a rush to do new acquisitions, but McMahon noted: “There seems to be a lot of bolt-on opportunities at the moment, particularly in the branded space, with a lot of craft brewers finding it difficult going right now, not having maybe secured a route to market.”

As the company gets back to normal after Covid, it delivered an operating profit of €84.1m, an increase of 75.6pc.

Davy said that while the ERP issues may have overshadowed the results, key takeways included dividend reinstatement – there will be a full-year dividend of 3.79 cent per share, a total distribution of €15m.

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