C&C CEO steps down amid system challenges
David Forde, chief executive of C&C Group – owner of Tennent’s – is stepping down and has been replaced by CFO Patrick McMahon with immediate effect as it warned it was likely to take a £22m hit from a botched software upgrade.
Ralph Findlay, chair, has been appointed executive chair to support the management transition as Mr McMahon will also retain his responsibilities as CFO until a successor is hired.
C&C shares plunged 14.8%, or 22.8p, to 131p at the close.
Mr Findlay said: “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.”
The change comes as the Dublin-based company, which also produces Magners and Bulmers cider, announced that it has encountered “significant challenges”, in terms of time, cost and customer service, in the implementation of a complex Enterprise Resource Planning system upgrade in the Matthew Clark and Bibendum businesses in 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,” said the company.
“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 (£22m) 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. Excluding the impact on MCB, C&C said it 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.
It expects to report operating profit of €84 million. C&C said its strong free cash flow generation, together with increased balance sheet strength will also enable a re-instatement of dividend payments to shareholders.
The group will issue FY2023 full year results on 24 May.
Wood buyback call
An activist investor has repeated its call for John Wood Group to start a share buyback days after Apollo Global Management decided against making a formal takeover bid for the Aberdeen-based company.
London-based Sparta Capital — headed by Franck Tuill, formerly of Elliot Management — first asked for a share buyback in December as it felt Wood was vulnerable to approaches.
Apollo made five proposals, the highest worth 240p per share, but walked away on Monday.
Sparta noted that Wood had continued to perform well even with the “distraction” of a possible takeover and it praised the high quality of the business.
It reiterated its previous stance that the “material undervaluation” of Wood’s shares meant it could still be the target of another approach.
Ken Gilmartin, Wood’s chief executive, bought 300,000 shares this week, taking his holding to more than 600,000.
The FTSE 100 closed up 14.57 points at 7,756.87, below its its day high, but boosted by progress on debt ceiling talks in the US.
House Speaker Kevin McCarthy indicated that both sides may reach agreement as soon as this weekend to avoid a catastrophic US default.
Jerome Powell, chairman of the Federal Reserve left the door open to a pause in interest rate hikes at its next policy meeting, even as he noted that inflation from the services sector was persistent.
According to Dow Jones Newswires, Jerome Powell, who was speaking at a panel on monetary policy in Washington D.C., said that inflation remained “far” above the Federal Reserve’s 2.0% target.
Regarding recent “developments” in the banking sector, in his judgement they could mean that policy rates would not need to be raised as high in order to meet the Fed’s goals.
European stocks rallied to a 15-month high following fresh gains on Wall Street.
Nationwide Building Society will pay its customers £340m through payments to their current accounts after reporting a 40% leap in annual profit driven by the succession of interest rate hikes.
A survey suggests that consumer confidence in the year ahead is continuing to recover despite persistent cost-of-living pressures.
GfK’s consumer confidence index rose by three points in May to minus 27, the fourth monthly increase in a row from January’s minus 45.