C&C Group H2 Earnings Call Highlights

Key Points

• C&C Group’s FY 2026 results were weaker as group revenue fell 6% and operating profit before exceptional items dropped to EUR 70.5 million, hurt mainly by soft hospitality conditions and a sharp decline in distribution performance.
• The branded drinks business outperformed, with revenue up 4% and operating profit rising to EUR 51 million, driven by stronger trading in Tennent’s and Bulmers and improved margins in the branded portfolio.
• C&C is reorganizing around two core units — C&C Brands and Matthew Clark Bibendum (MCB) — and expects to rebuild MCB’s margin to 3% to 4% over the next few years while continuing to return capital to shareholders through dividends.

C&C Group LON: CCR reported a difficult FY 2026 financial performance as weaker hospitality market conditions weighed on volumes and mix, particularly in its wholesale distribution business, even as its branded drinks portfolio grew revenue.

Opening the company’s full-year results presentation, Roger said the year had been “busy” and that C&C had made “encouraging progress” on strategic priorities. However, he said the company did “not yet have the resilience or agility as a business to withstand the headwinds” facing the hospitality sector.

Adam Phillips, who recently joined as chief financial officer, said group revenue declined 6% year over year. Branded revenue rose 4% to EUR 310 million, supported by growth for Tennent’s and Bulmers, while distribution revenue fell 8% amid weak market volumes, product mix headwinds and the removal of BBG brand sales in the Republic of Ireland.

Operating Profit Declines as Distribution Weakens

Phillips said operating profit before exceptional items fell to EUR 70.5 million from EUR 77.1 million a year earlier, broadly tracking the revenue decline. The operating margin was broadly flat at 4.5%, as margin expansion in branded drinks offset dilution in distribution.

In branded drinks, operating profit increased to EUR 51 million from EUR 46.1 million, with margins improving 1.1 percentage points to 16.5%. Phillips attributed the improvement to efficiency, lower costs and trading disciplines. In distribution, operating profit fell to EUR 19.5 million from EUR 31 million, driven by volume and mix pressures, including a shift from higher-margin wines and spirits toward long alcoholic drinks.

Exceptional costs totaled EUR 40.7 million before tax, including non-cash impairments of goodwill and assets. Phillips said the cash cost of exceptional items was EUR 20.8 million, principally related to restructuring.

Free cash flow before exceptional items was EUR 45.3 million. Phillips said adjusted EBITDA was EUR 104 million, down EUR 7.7 million, while working capital represented a EUR 21 million outflow. Net debt ended the year at EUR 121.4 million on a pre-IFRS 16 basis, and leverage was 1.6 times.

The board proposed a final dividend of EUR 0.0367, taking the full-year dividend to EUR 0.0575. Phillips said that, including the FY 2026 final dividend to be paid in July, the company will have returned EUR 105 million to shareholders since the start of FY 2025.

Company Moves Away From ‘One C&C’ Model

Roger said C&C had spent the past year stabilizing the business and addressing issues in financial control, risk, systems, business processes, safety and service. He said the company had changed about 70% of its senior leadership team and was implementing a “Data DNA” program to create a single data integration platform across more than 11 data structures.

He said C&C had also rebuilt its cost allocation model to improve transparency and decision-making. The company now plans to progressively reverse out of the “One C&C” model and operate around two main business units: C&C Brands and Matthew Clark Bibendum, now referred to as MCB.

C&C Brands will include the company’s historic branded operations, including Tennent Caledonian Breweries, Tennent’s NI, Bulmers and C&C International. Roger described it as a brand-driven business focused on developing company-owned brands across beer, cider and a broader multi-beverage portfolio.

MCB, the company’s wholesale business, will be managed as a standalone profit center. Roger said MCB had “at long last” been integrated into a single organization with a single product portfolio approach. He said the business requires renovation and that C&C aims over the next few years to return MCB’s operating margin to a 3% to 4% range through actions on cost, service, buying margin and commercial controls.

Brands Update: Tennent’s, Bulmers and Magners

Roger said Tennent’s Lager maintained market share in Scotland during its 140th anniversary year. He said Tennent’s had four of the five best-selling beer SKUs in the off-trade in Scotland and gained share of Scottish lager in the on-trade over Christmas and the full year. He also said Tennent’s is now a top 10 lager brand by volume across total Great Britain.

The company said Tennent’s Bavarian Pilsner, launched in December as a limited-edition 4.7% ABV beer, had performed strongly enough to become a permanent on-trade SKU, with retailers also interested. C&C also introduced Tennent’s Tops, a lager blended with lemon.

Bulmers delivered a strong full-year performance, according to Roger. Bulmers flavor variants grew 10% year over year, and Bulmers 0.0 volume grew 24%, supported by increased store listings. Roger said Bulmers 0.0 holds a 33% share of the 0.0 cider category in the Republic of Ireland.

Magners had a “bumpy start” after C&C took brand execution back in-house from the BBG ABI sales system, Roger said, but he added that the brand is now “on the road to recovery.” Magners remains the No. 1 packaged cider in the Great Britain on-trade, and Roger said new grocery listings supported off-trade volume and share gains.

Premium Portfolio and Sustainability

C&C also highlighted growth in premium brands. Menabrea grew 4% during the year, supported by a partnership with TV chef James Martin and new product formats. Outcider is now the top-selling on-trade cider brand in Northern Ireland, and after launching in Scotland last year has nearly 300 on-trade distribution points. C&C plans to launch Outcider in England and Wales.

The company also acquired Drygate and Innis & Gunn. Roger said the Innis & Gunn acquisition broadened C&C’s branded portfolio with a premium, established brand and carried “very low executional risk” because C&C was already the manufacturer and commercial partner.

On sustainability, Roger said C&C continued to progress climate-related targets, health and safety initiatives, and site investments. Planned projects include an electric boiler to reduce reliance on gas and associated emissions, and a dealcoholization plant at Well Park to support development of low- and no-alcohol products.

Outlook and Analyst Questions

Roger said trading early in FY 2027 was in line with expectations. The company plans to provide more detail at a Capital Markets Day in September, including financial targets for business units, capital allocation, leverage targets, dividend policy, brand development plans and the MCB margin recovery plan.

During the question-and-answer session, Roger said the MCB margin target of 3% to 4% was achievable because the required steps were “largely within our control,” including commercial controls and operating improvements. Asked about the importance of England to C&C’s brands, he said the company would grow from its strength in Scotland and the island of Ireland but expected to do more over time in England and Wales.

Phillips said C&C was well hedged across FY 2027, though some hedges would begin rolling off in the second half. He said fuel and freight represented the greatest exposure, though not a “hugely material” one. Roger added that pricing changes had already been made and that C&C was not currently seeing momentum for further changes in third-party brand pricing.

Asked about free cash flow, Phillips said the working capital outflow was the main moving item in FY 2026 and that while he did not expect it to fully reverse in the next 12 months, he also did not expect it to repeat. He said exceptional cash flows should come down over time.

About C&C Group LON: CCR

C&C Group plc is a leading, vertically integrated premium drinks company which manufactures, markets and distributes branded beer, cider, wine, spirits, and soft drinks across the UK and Ireland. C&C Group's portfolio of owned/exclusive brands include Bulmers, the leading Irish cider brand and Tennent's, the leading Scottish beer brand; as well as a range of fast-growing, premium and craft ciders and beers, such as Heverlee, Menabrea, Five Lamps and Orchard Pig. C&C exports its Magners and Tennent's brands to over 40 countries worldwide. C&C Group has owned brand and contract manufacturing/packing operations in CoTipperary, Ireland and Glasgow, Scotland. C&C is the No.1 drinks distributor to the UK and Ireland hospitality sectors.

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