Tennent’s owner C&C sees pub sales 'significantly impacted' by tighter Covid restrictions
Tennent’s owner C&C Group has warned of a slowdown in trade amid tighter coronavirus restrictions, eating into its profits.
In a trading update to investors, the Irish drinks firm said trading conditions for its on-trade - pub and restaurants - business had been “significantly impacted” by renewed government restrictions across the UK and Ireland.
In the month of December, which the firm noted was its key festive trading period, C&C traded directly with 81 per cent of on-trade outlets compared with the full year, delivering just 64 per cent of the volume against an expectation of 90 per cent and 90 per cent respectively.
While December’s performance fell short of hopes, the group generated a “modest” profit for the month.
It added: “The operating profit outcome for the [second-half] period will be affected by the nature, extent and duration of government restrictions. Consequently, C&C will provide an updated operating profit range in its [full-year] pre-close trading statement in March.
“The group has a strong capital structure which provides more than adequate liquidity to support its current and expected business needs, together with its strong free cash flow generation and conversion characteristics.
“As the preeminent brand led drinks distributor in the UK and Ireland, we have demonstrated our ability to effectively service demand during this period. We continue to drive efficiencies throughout our business in the form of permanent operating cost reduction.”
Shore Capital analyst Greg Johnson noted: “Overall, although disappointing, we are encouraged by the recovery in trading in Q3 [and] the improving balance sheet metrics in the first half.”
The update came after the group said in late October that it had been encouraged by how quickly the on-trade sector had recovered post-lockdown as it swung back to profit in the first half of its financial year.
Releasing interim results, the firm said it had seen Tennent’s volume share increase by 1.1 per cent to 48.3 per cent with the reopening of pubs and restaurants.
Bosses highlighted the positive impact of the lager brand’s biggest marketing campaign since T in the Park in 2016 which tied in with the national football team’s involvement in the Euro Championship.
The firm said at the time: “Our recent investment into strengthening and innovating our Tennent’s brand with Light and Zero extensions, continues to perform strongly.
“Tennent’s Light now has approximately 1,400 distribution points across Great Britain with the brand gaining over 400 listings in England and Wales through national retail.”
C&C had flagged the return to profit in a half-year trading update in September.
Confirming an operating profit of €16 million (£13.5m) for the first half despite some restrictions still being in place, group chief executive David Forde told investors: “Following the easing of on-trade restrictions over [the first half], we are delighted to be back serving our customers and consumers in both indoor and outdoor hospitality across our core markets of UK and Ireland.”
Full-year operating profit was expected to have been in the range of €50m to €55m, according to October’s update.