C&C Group says FY results to be hit by consumer costs

13th Jan 2023 07:26

(Sharecast News) - Bulmers cider maker C&C Group said annual results would be hit by the cost of living crisis affecting consumers.

Despite year-on-year net revenue growth of around 20% in the key trading month of December, the company said it now expected operating profit in the year to February of €84-88m against consensus estimates of €95m.

"As outlined in first half results, our outlook for H2 noted a potential significant impact from the continuing cost of living pressures facing consumers," C&C said.

"We believe consumer spending pressure is a driver behind this trading performance and will continue to be so in the near-term."

"Further, trading has been significantly impacted by rail network strikes in the UK, reducing footfall in urban areas over the key festive trading period."

Analysts at Shore Capital had pencilled in a profit of around €90m, with the pick-up in December "less than hoped for - we would have anticipated +30%".

"The middle of the range would be equivalent to a 5% cut in our current forecast. From a read across perspective, we would expect that city and metropolitan centres have been hit harder than suburban, noting Mitchells & Butlers solid update across its broad estate."

Shore rated the stock as a 'buy', despite the disappointing update, saying the current valuation of eight times core earnings "reflects the progress the group is making".

"Distribution margins at around 4% is a base on which profitability can build over time as branded margins recover. We would see continued evidence of sustained market share growth in cider and premium beer as catalyst for a re-rating, whilst the balance sheet retains significant optionality."

Reporting by Frank Prenesti for Sharecast.com