Tech issues hit interim profits at C&C

26th Oct 2023 07:16

(Sharecast News) - C&C Group reported a sharp fall in half-year profits on Thursday, after the implementation of a new software system hit the British distribution business.

The Irish drinks group, which makes Bulmers, Magners and Tennents, among others, reported a 1.2% dip in net revenues in the six months to 31 August to €872.5m. Operating profits tumbled 43% to €30.5m, however, although that was at the top end of company forecasts.

C&C blamed a one-off €22m disruption caused by the troubled implementation of a new enterprise resource planning system in its British distribution business.

C&C first warned in May that the "complex" system had taken longer than expected to implement, hitting both service levels and profitability. Chief executive David Forde stepped down at the same time.

Patrick McMahon, who replaced Forde as chief executive, said: "Set against a difficult market backdrop we are pleased with the strength the performance of our branded businesses in Ireland and Scotland in the period.

"We have made significant progress in restoring customer levels following the ERP system implementation issues in our GB distribution business within our planned timeframe."

Looking to the second half, C&C said its priority was to deliver "outstanding service...win back customers and improve operating efficiency".

It continued: "Operating environment challenges are expected to persist with continued cost pressures over the next 12 months, before some easing in the 2025 full year, following which we target an increase in branded margins as we continue to take pricing and cost actions and improve operating efficiency."

Shore Capital said: "Adjusted for the €22m hit from the previously disclosed ERP issues, operating profit was broadly stable, a credible performance given the backdrop.

"We keep our 2024 full-year operating profit estimate of around €60m, which would be broadly flat adjusted for the additional ERP impact - around €25m - with a market rebound in profitability expected next year."

As at 0930 BST, shares in C&C were largely flat at 139.2p.