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Drinks

C&C Group Expecting EBIT At 'Upper End Of Market Estimates'

Drinks firm C&C Group has said that it expects group EBIT to be at the 'upper end of current market estimates' in its full year to 28 February, while full year adjusted EPS growth is anticipated to be c.20%.

The group made the announcement in trading statement issued ahead of its full-year results on 22 May.

The Tennent's owner said that operational delivery, customer service and the underlying cash contribution of both Matthew Clark and Bibendum have 'continued to improve' in the second half of the year, with full year debt expected to be lower than estimates.

The Matthew Clark and Bibendum businesses have 'significant underlying momentum', the group said, 'across key financial and performance measures, with good progress made on the identification of synergy benefits'.

It added that it maintained 'positive trading momentum' in its Scottish and Irish branded businesses.

Analyst Viewpoint

Commenting on the business' performance, Cathal Kenny of Davy stockbrokers said, "C&C’s pre-close update confirms that positive earnings momentum has been sustained; as such, we expect to upgrade our FY19 EPS by c.6%. The key takeaway is working capital management at Matthew Clark Bibendum (MCB) through H2 2019, which drives a materially lower than expected, full-year net debt out-turn. Improving cash metrics at MCB adds further credence to deal merits from both a strategic and financial perspective.

"C&C’s upcoming Capital Markets Day provides a timely window for management to elaborate on the transaction merits and provide medium-term guidance for the group. We continue to view the shares as undervalued."

© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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