C&C Group resumes dividend payouts following massive profit growth

C&C Group has cut dividend payments after a huge increase in profits last year thanks to price increases and the lack of Covid-related restrictions.

Underlying profits for the Dublin-based drinks company, best known for making Magners cider and Tennent’s lager, rose by about three-quarters to €84.1 million for the 12 months ended February.

The operating margin grew to 5 percent, although trading in the second half of the year was impacted by successive rail strikes in the UK and declining consumer demand amid high inflation.

Net sales increased 18.4 percent to €1.7 billion, with price increases accounting for 14.2 percent of the growth and the remainder due to higher sales volumes.

In the UK, the group’s premium beer brands posted a 43.2 percent increase in on-trade volumes, supported by demand for Menabrea and Heverlee.

Following the result, the company has decided to pay shareholders a dividend of 3.79 cents per share, having last paid a full annual dividend three years ago at the start of the pandemic.

Newly appointed CEO Patrick McMahon said: ‘Against a challenging backdrop in FY2023, C&C delivered an improved performance against all financial measures.

“The stronger balance sheet and inherently strong free cash flow characteristics enable C&C to return capital to shareholders through the recovery of dividends.”

McMahon’s predecessor David Forde resigned last week at the same time as C&C admitted a failed software upgrade at Matthew Clark and Bibendum companies.

It said the implementation process had taken longer and was “significantly more challenging and far-reaching” than expected, with a “consistent material impact” on revenue and service levels.

While the company noted that normal service volumes had “broadly returned” by the end of March, it noted that April’s problems worsened during seasonal trading.

Consequently, the Dublin-based company warned that the disruption would cause around €25 million in one-off costs this financial year.

Forde had joined C&C at the height of the Covid-19 pandemic in November 2020, when the alcoholic beverage industry was facing severe restrictions on hospitality venues.

Business recovered significantly in the following two years, with C&C returning to profit in 2022 after sales in the on-trade business more than tripled.

Prior to C&C, Forde spent more than three decades at Heineken, including seven years as managing director of the UK division.

During his time at the Dutch brewing giant, the Galway-born executive led the £7.8bn joint takeover with Carlsberg of Scottish & Newcastle, then owners of Fosters and Newcastle Brown Ale.

C&C Group shares were 1.2 percent lower at 135.2 pence late Wednesday afternoon, meaning they’re down about 23 percent since the start of the year.