Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- C&C Group PLC (CGPZF, Financial) reported a 29% increase in operating profit to EUR40.3 million, demonstrating strong earnings growth.
- The company declared a dividend of EUR0.20 per share, marking a 6% increase year on year.
- C&C Group PLC (CGPZF) achieved significant cash flow improvement, with a net inflow of over EUR19 million.
- The company is on track to meet its financial targets for FY27, including sales of EUR2 billion and EBIT of EUR100 million.
- C&C Group PLC (CGPZF) has successfully increased its market share in key segments, such as the Scottish beer and lager market.
Negative Points
- Net revenue was slightly down due to the exit from non-core activities and lower contract brewing volumes.
- The cider market in Ireland was weak, with Bulmers' net revenues down 3.5% due to a poor summer.
- The company faced challenges from cost of living pressures and a flight to value, impacting consumer spending patterns.
- There was an adverse mix change in the distribution business, with a shift away from higher-margin wines and spirits.
- C&C Group PLC (CGPZF) is still in the early stages of leveraging its distribution platform to grow premium brands, indicating potential future challenges.
Q & A Highlights
Q: Regarding H2 profit build, should we expect similar growth in the branded business as in H1, and will distribution improvements drive the rest of the growth? Also, does this imply distribution margins will reach 3.5% in H2?
A: The growth will predominantly come from distribution recovery. The majority of the EUR10 million growth for H2 will be from distribution, though not as pronounced as H1. Branded growth will be modest. We don't expect to hit 3.5% distribution margin in H2, but there will be continued improvement. - Andrew Andrea, Chief Financial and Transformation Officer
Q: How do you plan to achieve the EUR2 billion net revenue target by 2027? Will distribution revenues need to grow by 10%?
A: Opportunities exist within our branded business for revenue growth, including premium brands and managing Magners effectively. However, the majority of growth is expected from the distribution business, particularly by targeting segments where we currently have a low market share. - Ralph Findlay, Chair and Chief Executive Officer
Q: Which segments of distribution offer growth opportunities, and how much of the lost customers have you recovered?
A: Opportunities exist in increasing our own branded representation and targeting the independent free trade market. We've recovered about half of the lost customers, with plans to recover the rest over the next year. - Ralph Findlay, Chair and Chief Executive Officer and Andrew Andrea, Chief Financial and Transformation Officer
Q: How much has marketing spending increased, and what are the plans for Magners and premium brands?
A: Direct brand marketing is at a similar level to last year. We plan to allocate more to premium brands and extend them into new geographies. Plans for Magners are being formulated, with guidance to be provided at year-end results. - Andrew Andrea, Chief Financial and Transformation Officer
Q: Can the 15% premium brand revenue target be achieved with existing brands, and how long will the current mix effect persist?
A: We can achieve the target with existing brands by managing them more effectively. The mix effect, driven by cost of living pressures, is expected to continue but at a less steep rate. - Ralph Findlay, Chair and Chief Executive Officer
Q: How far along are you in leveraging Matthew Clark and Bibendum to grow premium brands, and are spirits gaining momentum as Christmas approaches?
A: We are at the beginning of leveraging Matthew Clark for premium brands. While Christmas typically sees more spirits consumption, beer and cider are still outperforming year-on-year. - Ralph Findlay, Chair and Chief Executive Officer
Q: Can you elaborate on the journey towards achieving the distribution EBIT margin target and the impact of the mix effect?
A: The journey involves gains from independent free trade and cost savings. The mix effect, with a shift towards beer and cider, is expected to persist but at a reduced rate. - Andrew Andrea, Chief Financial and Transformation Officer
Q: What are the current trading trends and outlook for the festive period?
A: The business is better prepared than last year, with an extended trading period expected. Christmas tends to be resilient to broader macroeconomic pressures. - Ralph Findlay, Chair and Chief Executive Officer and Andrew Andrea, Chief Financial and Transformation Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
