What C&C Group (CCR) Said on Its H1 Earnings Call

Key Points

• Profit and cash flow improved despite lower revenue: First-half operating profit rose 4% to €43.4 million, while underlying free cash flow increased 18% to €36.9 million. Net debt excluding leases fell to €113.7 million, reducing leverage to 1.4 times.
• Branded growth offset distribution weakness: Branded revenue grew 3% and operating profit increased to €29.2 million, helped by pricing, product mix and stronger Tennent’s and Bulmers performance. Distribution revenue declined 4% as C&C exited lower-margin business and faced outlet attrition.
• C&C is focused on integration and long-term growth: The company is integrating Innis & Gunn and Asahi’s Nectar wholesale operation into its revamped C&C Brands and MCB structure. Management reiterated its full-year expectations and medium-term targets of €85 million in fiscal 2030 operating profit and more than €100 million in free cash flow from fiscal 2028–2030.

C&C Group LON: CCR reported higher first-half operating profit and free cash flow despite a decline in group revenue, as growth in its branded business, pricing, product mix and cost control offset weaker distribution sales.

For the first half of fiscal 2027, operating profit before exceptional items rose 4% to €43.4 million from €41.9 million a year earlier. Revenue declined 3% on a constant-currency basis, with a 3% increase in branded revenue more than offset by a 4% decline in distribution revenue.

Chief Financial Officer Adam Phillips said the group generated €36.9 million of underlying free cash flow, up 18% year over year. Free cash flow after lease payments and exceptional costs was €25.1 million. Net debt excluding leases declined by nearly €8 million from February to €113.7 million, reducing leverage to 1.4 times from 1.6 times at the fiscal year-end.

Branded growth offsets distribution decline

Branded revenue increased to €177 million, supported by growth at Tennent’s and Bulmers, favorable summer weather, the FIFA World Cup, brand investment, innovation and the contribution from Innis & Gunn, which C&C acquired in March.

Branded operating profit rose €2.5 million to €29.2 million. Phillips said revenue growth, pricing and favorable mix improved gross margin sufficiently to offset cost inflation. Branded operating margin increased by 80 basis points.

Distribution revenue fell to €618 million, reflecting the planned exit from lower-margin customer business, outlet attrition and underperformance in certain wine and spirits categories. Distribution operating profit declined €1 million to €14.2 million, while the segment’s margin remained broadly flat at 2.3%.

Chief Executive Officer Roger White said approximately half of the reported 4% distribution revenue decline related to deliberate decisions not to pursue lower-margin volume, suggesting the remaining underlying business was broadly flat. He said the company expects a Christmas trading period similar to last year, while noting that consumer demand remains uncertain.

Within the distribution segment, Matthew Clark Bibendum, or MCB, generated an operating margin of about 1% in the first half, broadly unchanged from a year earlier, Phillips said. The company has completed the alignment of Matthew Clark and Bibendum and is now focused on margin recovery, including pricing and optimizing its cost to serve.

Acquisitions and operating structure

C&C said it has fully integrated Innis & Gunn into its core portfolio after buying the brand from administration. White said the initial focus has been stabilizing the business after challenges before the acquisition, with the company now assessing portfolio choices and international opportunities, including in Canada.

The group also completed its acquisition of Asahi’s wholesale business, primarily the Nectar wholesale operation, during the 10 days preceding the results call. The deal includes a leased depot in Hindon, relevant inventory and the local team, while the wider business is being integrated into MCB.

White described the Nectar transaction as a consolidation opportunity intended to add customers to C&C’s existing platform, improve network utilization and create synergy benefits. He said the acquired operation had been subscale, making it difficult to absorb procurement and operating costs. C&C expects all customers to be transferred by early in the new year.

The acquisition also includes a longer-term partnership with Asahi to grow its portfolio through the MCB wholesale platform.

The company is transitioning toward two operating models: C&C Brands, its asset-backed branded business, and MCB, its hospitality-focused wholesale business. Financial reporting remains under the previous Branded and Distribution segments for now.

Innovation and brand development

White said the group’s brands benefited from favorable market conditions during the summer, with Tennent’s gaining share in Scotland’s lager market. Bulmers also gained cider share, while Magners retained its leading position in packaged apple cider in the Great Britain on-trade, according to the company.

C&C launched Tennent’s Stout after a year of planning and development. White said stout is a fast-growing category with increasing penetration among younger consumers, and that early trading signs had been encouraging. He added that the product could have strategic value by helping broaden the geographic reach of the Tennent’s master brand beyond its core Scottish market.

The company also cited Tennent’s Tops, Bulmers Flavours and alcohol-free variants as contributors to brand activity. Bulmers was described as the leading low- and no-alcohol cider product in the Republic of Ireland.

While innovation has not yet had a major financial effect, White said it should make a material contribution over time. C&C also expects third-party manufacturing and partnership activity to support branded volume growth in coming years. Phillips said roughly one-third of output from the Wellpark and Clonmel sites is currently third-party manufacturing, and that activity grew in the first half.

Cash, costs and outlook

Exceptional charges were €6.9 million before tax in the first half, broadly in line with the prior year. The group continues to expect full-year exceptional charges to be lower than last year.

Capital expenditure rose to €7 million, including investment in a dealcoholisation facility and yeast room at Wellpark and equipment in Clonmel. White said the dealcoholisation technology is expected to be operational early in the new year and should strengthen the company’s no- and low-alcohol offering.

The company set an interim dividend of €0.02 per share, 4% lower than the previous year’s interim payment due to the timing split between interim and final dividends. Phillips said the board intends to pay a progressive ordinary dividend for fiscal 2027.

C&C reiterated its medium-term targets of €85 million in operating profit by fiscal 2030 and more than €100 million in free cash flow over fiscal 2028 through fiscal 2030, after leases and exceptional costs. Management expects fiscal 2028 profit to be flat against fiscal 2027 before growth resumes thereafter.

White said the company remains committed to meeting its full-year expectations, while continuing its recovery plan through simplification, portfolio development, improved wholesale margins and stronger operational resilience.

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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