Bulmer's cider maker, the C&C Group, issued a brief trading update where it reported that its performance in the four months to 31 December has been in line with expectations.
The group said that its Matthew Clark and Bibendum businesses are performing strongly and that despite political uncertainty, “the group is increasingly well positioned going into 2019”.
This is what leading analysts have to say about the group’s performance.
Cathal Kenny, Davy Stockbrokers
“The key takeaway from C&C’s trading statement is the achievement of operational and commercial progress at Matthew Clark Bibendum (MCB) during the key Christmas trading period. Strong execution is likely to prompt the initiation of the ‘simplification’ phase (including synergies) at MCB.
“Trading momentum for the core business was sustained into H2, reflecting platform resilience. As such, we envisage a slight upward revision to FY19 forecasts.”
"Given that MCB was in the process of being stabilised after the extent of the disruption in the months prior to acquisition had been quantified and that Christmas is a key trading period for the business, it is heartening to note that operational delivery and customer service in both companies have been 'very strong and ahead of plan'.
"Across the rest of the Group, positive trading has continued with management guiding that revenue is tracking mid-single digit ahead of last year. […] At the Group level, a strong balance sheet and normalised cash flow conversion of 60-70% of EBITDA has management noting that the company is 'poised to provide enhanced shareholder returns'."
Darren McKinley, Cantor Fitzgerald
“We continue to rate C&C as an outperform offering 17% total return in 2019 from current levels. The rationale behind our bullish call is predicated on two focus points. Firstly, C&C’s core business has returned to growth driven by a combination of volume and price gains. Secondly, unlike with previous acquisitions, we believe that C&C management has added significant value via acquiring MCB.
“MCB was acquired at 3.5x EV/EBITDA which is a significant discount to C&C valuations and complements C&C existing business model. […] Today’s announcement gives us confidence in the MCB integration and should hopefully boost investor sentiment, leading to a re-rating.”
Patrick Higgins, Goodbody
“Overall, we consider this to be an encouraging update, particularly the strong operational performance in MC with the businesses now stabilised and well positioned to drive profit growth in FY20.
“The continued momentum in the underlying business is also encouraging given the strong H1 performance benefitted from the excellent summer weather conditions. Consensus and Goodbody EBIT estimates currently stand at €104 million, we will likely leave this number broadly unchanged.
© 2019 Checkout – your source for the latest Irish retail news. Article by Aidan O’Sullivan. Click subscribe to sign up for the Checkout print edition.
