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C&C playing ‘long game’ in US as its asset value is cut by €129m and revenue slumps

Bulmers and Magners owner C&C is under no pressure from shareholders to sell its US operations, after slashing the value of its assets there by €129m during its last financial year, according to CEO Stephen Glancey.

The company said the carrying value of its US assets is now €45m. Mr Glancey said the long-embattled US arm is operating at break-even and is stable, but conceded that the group still has no visibility on when its market there might recover.

C&C’s North America revenue slumped 33.6pc to €24.5m in the latest financial year, with volumes having also tumbled by 33.6pc. Mr Glancey told analysts that recovery in the US will be slow.

“Retailers are rationalising their range. Regaining share on lost listings will be challenging for our US brands in this environment,” he said.

“Our intention is to play a long game on it,” Mr Glancey told the Irish Independent. “We think that rather like we’ve seen in the UK, the big international brewers will come and go into the cider category and will focus more on beer and craft beer.

“There will be a loss of shelf space, we get that, but there will be a shake-out and in the longer term, the Magners brand will be successful.”

“We intend to keep the business,” he added. “Our shareholders just look at the US as optionality. I don’t think there’s any pressure from shareholders. We are patient investors.”

C&C, which also owns brands including Tennent’s, has had a difficult number of years in the US where it now has a distribution partnership with domestic brewer Pabst. That agreement was signed in 2015, and Pabst also has a long-term right to buy C&C’s US cider brands.

Last year, it also rationalised its business closer to home, consolidating plant activity in Clonmel, Co Tipperary, and at its Wellpark Brewery in Glasgow.

Reporting full-year results yesterday, C&C said that its net revenue fell 6.9pc to €559.5m in the 12 months to the end of February, while its operating profit was virtually unchanged at €95m. The results were in line with expectations.

In Ireland, its net revenue declined 4pc to €242.3m, but operating profit rose 3.6pc to €48.6m.Bulmers accounted for 25.5pc of its volume sales in Ireland during the last financial year.

Mr Glancey said the Irish market has seen an aggressive challenger brand enter the market in recent years, with the arrival of Heineken’s Orchard Thieves.

“However, the Bulmers brand remains in rude health and close to the affections of Irish people of all age groups,” he said. “We’re investing from a position of strength.”

C&C will increase its marketing spend for Bulmers in Ireland by €4m this financial year.

Last year, the group revamped its UK Magners brand (the Bulmers brand there is owned by a rival), resulting in a 10.9pc uplift in volume sales of the drink in that market.
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