Trading Update & Directorate Changes
Patrick McMahon appointed as Group CEO and Ralph Findlay appointed as Executive Chair
C&C Group plc (‘C&C’ or the 'Group’), a leading, vertically integrated premium drinks company which manufactures, markets and distributes branded beer, cider, wine, spirits and soft drinks across the UK and Ireland, announces that it has encountered significant challenges, in terms of time, cost and customer service, in the implementation of a complex Enterprise Resource Planning (‘ERP’) system upgrade in the Matthew Clark and Bibendum (‘MCB’) businesses in Great Britain.
The implementation process has taken longer and been significantly more challenging and disruptive than originally envisaged, with a consequent material impact on service and profitability within MCB. Service levels had largely returned to normal levels by the Pre-Close Trading Statement of 23 March 2023, however continuing system implementation challenges, impacted by greater seasonal trading volume, saw a deterioration in service levels in April. An improvement through May is being achieved by investing in material additional cost and resources, ahead of a system fix being implemented to permanently restore service to normal levels.
C&C currently expects a one-off impact of c.€25 million associated with ERP system disruption in FY2024, reflecting the cost associated with restoring service levels and lost revenue. There is expected to be a consequential increase in working capital in FY2024, however leverage is expected to remain within the Group’s stated range of 1.5x to 2.0x. Excluding the impact on MCB, C&C is currently performing in line with management expectations for FY2024 and the Board is confident in the Group’s medium and long-term strategy and prospects.
C&C re-affirms the guidance given in its Pre-Close Trading Statement of 23 March 2023. Specifically, the Group expects to report operating profit of €84 million. C&C’s strong free cash flow generation, together with increased balance sheet strength will also enable a re-instatement of dividend payments to shareholders, with respect to FY2023.
The Group also announces that David Forde, having navigated C&C through the challenges of the COVID-19 pandemic, has informed the Board that he wishes to step down as Chief Executive Officer. He will cease to be a Director with immediate effect but will be available to help ensure a smooth handover of responsibilities. Patrick McMahon, Group CFO, has been appointed Group CEO with immediate effect. Ralph Findlay, Chair, has been appointed Executive Chair to support the management transition as Patrick McMahon will also retain his responsibilities as CFO until a new CFO is appointed, the process for which will commence shortly.
Ralph Findlay, Chair of C&C, commented:
"David has informed the Board that he believes that now is the right time for him to step down as CEO and to allow the business to go forward under new leadership. The Board recognises and thanks David for his contribution to the Group throughout a challenging period for our industry. As part of our ongoing succession planning we keep internal and external candidates for all key positions under review and we are pleased to have someone with Paddy McMahon's skillset and knowledge of the business to step into that role."
David Forde commented:
"It has been a privilege to lead such a great business as C&C. I am grateful to all C&C colleagues for their dedication, resilience and commitment in recent years. I wish the Group all the best for the future under Ralph’s and Paddy’s strong leadership."
The Group will issue FY2023 full year results on Wednesday, 24 May 2023.
This announcement contains inside information. The person responsible for arranging the release of this announcement on behalf of C&C is Mark Chilton, Company Secretary & Group General Counsel.
C&C Group plc
Riona Heffernan, Group Finance and Investor Relations Director
UK & International Media
Investors, Analysts & Irish Media
Jonathan Neilan / Paddy Berkery / Aline Oliveira
Tel: +353 86 231 4135 / +353 86 6025988 / +353 83 8331644
About C&C Group plc
C&C Group plc is a leading, vertically integrated premium drinks company which manufactures, markets and distributes branded beer, cider, wine, spirits, and soft drinks across the UK and Ireland.
• C&C Group’s portfolio of owned/exclusive brands include: Bulmers, the leading Irish cider brand; Tennent’s, the leading Scottish beer brand; Magners the premium international cider brand; as well as a range of fast-growing, premium and craft ciders and beers, such as Heverlee, Menabrea, Five Lamps and Orchard Pig. C&C exports its Magners and Tennent’s brands to over 40 countries worldwide.
• C&C Group has owned brand and contract manufacturing/packing operations in Co.Tipperary, Ireland and Glasgow, Scotland.
• C&C is the No.1 drinks distributor to the UK and Ireland hospitality sectors. Operating through the Matthew Clark, Bibendum, Tennent’s and Bulmers Ireland brands, the Group has a market leading range, scale and reach including an intimate understanding of the markets it serves. Together this provides a key route-to-market for major international beverage companies.
C&C Group is a FTSE 250 company headquartered in Dublin and is listed on the London Stock Exchange.
Note regarding forward-looking statements
This announcement includes forward-looking statements, including statements concerning current expectations about future financial performance and economic and market conditions which C&C believes are reasonable. However, these statements are neither promises nor guarantees, but are subject to risks and uncertainties, including those factors discussed in our FY2022 Annual Report that could cause actual results to differ materially from those anticipated.
All remuneration arrangements for Patrick McMahon are consistent with the terms of the Directors' Remuneration Policy approved by shareholders at the AGM in July 2021 (the "Policy"). As Group CEO, Patrick McMahon will receive an annual base salary of €675k and a pension allowance of 5% of salary in line with the contribution available for the Group’s employees. The Board will review Patrick’s salary once he has been in role for a period of time to ensure that it recognises his experience, scope of responsibilities and performance.
All remuneration arrangements for Ralph Findlay are consistent with the terms of the Policy. As Executive Chair, Ralph Findlay will receive a fee of €660k per annum.
David Forde's remuneration and severance terms will be in line with his service agreement and the Directors' Remuneration Policy approved by shareholders at the AGM in July 2021 (the "Policy").
There are no other matters to disclose under Listing Rule 9.6.13.