C&C Group resumes dividend payouts following massive profit growth

C&C Group has brought back dividend payments after its earnings soared last year thanks to price hikes and an absence of Covid-related restrictions.

Underlying profits at the Dublin-based drinks firm, best known for making Magners cider and Tennent’s lager, jumped by about three-quarters to €84.1million for the 12 months ending February.

Its operating margin expanded to 5 per cent even though trading in the second half of the year was impacted by successive railway strikes in the UK, as well as falling consumer demand amid elevated inflation.

Resignation: David Forde has stood down as chief executive of C&C Group, the maker of Magners cider,  after just two and a half years in the role

Net revenue climbed by 18.4 per cent to €1.7billion, with price increases providing 14.2 per cent of the growth and the remainder due to higher volume sales.

In Great Britain, the group’s premium beer brands achieved a 43.2 per cent jump in on-trade volumes, buoyed by demand for Menabrea and Heverlee.

Following the result, the company has decided to hand shareholders a 3.79 cents per share dividend, having last paid out a full-year dividend three years ago at the start of the pandemic. 

Newly-appointed chief executive Patrick McMahon said: ‘Set against a challenging backdrop in FY2023, C&C delivered an improved performance against all financial measures.

‘Increased balance sheet strength and inherently strong free cash flow characteristics have enabled C&C to return capital to shareholders through the reinstatement of dividends.’

McMahon’s predecessor David Forde stood down last week at the same time C&C admitted a bungled software upgrade had occurred at its Matthew Clark and Bibendum businesses.

It said the implementation process had taken longer and ‘been significantly more challenging and disruptive’ than expected, causing a ‘consequent material impact’ on earnings and service levels.

Though the firm noted normal service volumes had ‘largely returned’ by late March, it observed problems get worse during April amid bumper seasonal trading.

Consequently, the Dublin-based company warned the disruption would create approximately €25million in one-off costs this financial year. 

Forde had joined C&C at the height of the Covid-19 pandemic in November 2020, when the alcoholic drinks industry suffered from onerous restrictions on hospitality venues.

Trading has recovered substantially in the following two years, with C&C bouncing back to profit in 2022 after its on-trade sales more than tripled.

Prior to C&C, Forde spent over three decades at Heineken, including seven years as managing director of its UK division.

During his time at the Dutch brewing giant, the Galway-born executive spearheaded its £7.8billion joint takeover with Carlsberg of Scottish & Newcastle, then owners of Fosters and Newcastle Brown Ale.

C&C Group shares were 1.2 per cent down at 135.2p on late Wednesday afternoon, meaning they have declined by about 23 per cent since the start of the year.