Annual Report 2014

operations REVIEW

International

International

Constant Currency(i)

FY2014

FY2013

Change

€m

€m

%

Revenue

79.9

47.2

69.3%

Net revenue

77.1

46.6

65.5%

- Price /mix impact

(1.7%)

- Volume impact

67.2%

Operating profit

16.0

9.5

68.4%

Operating margin (Net revenue)

20.8%

20.4%

Volume – (kHL)

545

326

67.2%

International

In FY2014, C&C’s international volumes increased by 67.2% and consequently, profit generated outside of the domestic markets increased to €16.0 million, equal to 12.6% of the Group’s operating profit(iii). (FY2014 includes the full year benefit of the Vermont Hard Cider Company whereas FY2013 reflects the financial results for 2 months).

- United States+-

In the US, the focus of the last 12 months has been the integration of the wholesaler network, finance, back office, manufacturing and sales functions. This has been a significant task for the local management team. However, by the end of the financial year, integration was broadly complete and C&C’s entire US business is now managed and operated from a single site by a single team. Critically, we now have a high quality and stable wholesaler network.

The integration and re-positioning of the US business impacted performance over the past 12 months at a time when competition also intensified. Consequently, historic growth trends for the Woodchuck brand were arrested in a challenging year. Over the past 12 months, shipment volumes declined by 1% and market-wide depletions fell by 6%. In addition, Magners and Hornsby’s shipment volumes declined by 17% and 40% respectively. For Woodchuck, the subdued volume trends relative to the market are largely attributable to a lower rate of sale in the off-trade and lost points of distribution in the on-trade.

The integration completed in FY2014 established a stable platform for VHCC. Additionally, a series of commercial initiatives including the opening of a brand new, state of the art $34.0 million cidery, packaging updates and new marketing plans are designed to provide business impetus.

- Export+-

Export volumes increased by 11% year on year and represent 34% of international volumes. We are now exporting to 47 countries with the top five accounting for almost two thirds of such sales (excluding the US).

The Magners brand grew by 13% with Canada and Australia up 27% and 8% respectively.

The Gaymers brand portfolio grew by 18% and Tennent’s continues to perform strongly in Italy growing 12%.Tennent’s Beer aged in Whisky Oak and Tennent’s Stout has been launched in selected international markets. Although small in volume terms, C&C’s Asian business grew by 108% and we are further investing in sales resource in FY2015.

For note references to the Operations Review please see page 29.