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Thu 2nd Jul 2015 - C&C Group reports mixed trading, Scotland hit by stricter drink drive laws
C&C Group reports mixed trading, Scotland hit by stricter drink drive laws: Drinks producer C&C Group has reported trading conditions in its first quarter, the three months to 31 May, were mixed. It stated: “The Group’s core markets of Ireland and Scotland were impacted by unseasonably cold and wet weather, particularly in May. The recent tightening of ‘drink- driving’ regulation in Scotland adds to the challenges already faced by the on-premise channel and rural/community pubs appear to have been disproportionately affected. Whilst the weak trading environment and the final phase of Wallaces integration in Scotland may mean a short term trading dip in our core markets, we continue to invest for the long term. Cost savings are being used to support incremental marketing spend and the new campaigns for Bulmers and Tennent’s have been well received so far. This should serve to underpin the strength of the brand led wholesaler business model in Ireland and Scotland. Once complete, the transformation in the business models will provide an improved platform for modest earnings growth and enhanced cash generation. C&C Brands, our business in England & Wales, had a positive first quarter, trading in line with expectations. Good progress has been made on right sizing the business and the savings generated provide room to support a more stable market share performance from our core cider brands. In the US, first quarter shipments were up year-on-year, albeit against soft prior year comparisons. Woodchuck depletions remain negative but the recently launched Gumption brand has performed strongly with distribution and rate of sale ahead of plan. The US cider category remains highly attractive and the Group is firmly committed to capitalising on its long-term growth potential. The export segment enjoyed a good start to the year with solid performances in Asia, Australia and Europe. New market opportunities in Africa and Eastern Europe, for our beer and cider brands, are presently in various stages of development. Outside of our core domestic markets, growth in the cider category continues to illustrate its long term credentials. Our balance sheet remains strong and there have been no significant changes to the financial position of the Group since FY2015 results were issued on 13 May, 2015. FY2016 is a year of stabilisation and investment for the Group. Following weaker than expected trading conditions in the first quarter, we anticipate a gradual improvement in core market performance as the year progresses. In the US and other Export markets, a return to growth is the target. For C&C brands, the objective for the financial year is earnings and volume stabilisation. Our asset base is well invested, the balance sheet strong and cash generation robust. Free cash flow as a percentage of Ebitda should be within the normalised 60% to 70% range for the year.”

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