Irish cider maker C&C (>> C&C Group Plc) believes the fall in the value of sterling will give it a competitive advantage over rivals with fewer sterling costs and could open up opportunities for acquisitions, its chief executive said on Thursday.
The drinks maker, whose brands include Magners, Bulmers and Tennents, reported operating profit for the six months through August of 55 million euros, down 8 percent on the previous year due to sterling weakness and increased marketing spend.
But Chief Executive Stephen Glancey said C&C, which has seen intense competition in the UK cider category in recent years, had a much larger proportion of sterling costs than European rivals who were looking to raise prices to account for sterling weakness against the euro.
"People with pan-European supply chains are trying to get price increases through in the UK, but we are well positioned to take advantage of that," Glancey said in an interview.
"C&C is not seeing any cost inflation coming through because we tend to buy in local currency ... we haven't got any price pressure."
Asked if there was an opportunity to cut prices to put pressure on rivals, Glancey said there might be, but would not speculate on possible trading strategies. The fall in the value of sterling may open up acquisition opportunities, he added.
"To some extent sterling assets are very cheap right now because we are a euro company," he said. "You could argue that now is the time to look at acquiring UK assets."
If C&C was to look at acquisitions, it would be interested in reinforcing its position in Ireland and Scotland, and strengthening the Magners brand in England and Wales.
He said the company would also consider bolt-on acquisitions and would keep a close eye on assets in central and eastern Europe in the wake of the merger of Anheuser-Busch InBev (>> AB InBev) and SABMiller (>> SABMiller plc).
In addition to the fall in the value of sterling-denominated revenue, Glancey also said uncertainty around Brexit was having an impact on the business. He said consumer sentiment in the UK "dampened quite considerably" in July, before recovering in August and September.
(Reporting by Conor Humphries; Editing by David Holmes)