Shares in drinks group C&C closed more than 11.3% lower in London trade after it reported a 56% drop in revenues and an operating loss for the year to the end of February, which it said was a direct result of the impact of Covid-19.

C&C's revenue for the year fell to €736.9m from €1.678 billion the previous year while its operating loss came to €59.6m.

This compares to an operating profit of €118.6m the previous year.

The announcement saw shares in the company fall by more than 15% at one point today, though the price recovered slightly later in the day.

With about 80% of C&C's pre Covid-19 net revenue derived from the hospitality sector, it said the Covid-19 the pandemic had an unprecedented impact on the group.

C&C also today announced a rights issue to raise gross proceeds of about £151m.

It said this will strengthen its balance sheet and ensure C&C is in a stronger position to achieve sustained growth and pursue its strategy as the hospitality sector emerges from the pandemic.

C&C said its Ireland division's net revenue decreased by 26.6% to €166.1m due to the continued lockdowns with Ireland experiencing one of the longest hospitality sector lockdowns in the world.

It noted a shift in consumption dynamics with off-trade volumes up 21.2% compared to the previous year.

It said that while this provided a welcome revenue stream, the lower margin and pack mix pressures were not sufficient to offset the impact of the on-trade closures and as a result, operating profit fell by €45.1m to a loss of €4.9m.

Bulmers off-trade volume and value share of Irish cider of 50.5% and 50.8% respectively as at February 2021 represents growth of 3.7% and 4.3% which was supported by the exceptionally good weather during spring and summer last year.

In March, the company said it had reduced its Irish workforce by more than 30 as a result of the impact of Covid-19.

C&C said its Great Britain division's net revenue decreased 36.4% to €206.8m due to the closure of the on-trade and volume moving into the lower margin off-trade channel and the division's operating profit fell by €52.2m to a loss of €8.4m.

But it said that despite the trading challenges the division has made considerable steps towards strengthening its portfolio, while it has optimised its cost base and has positioned itself for emerging trends.

Meanwhile, net revenues for the combined Matthew Clark and Bibendum Division came to €337.8m, a decrease of 69% on the previous year with the business almost exclusively an on-trade business.

The divison generated a loss of €44.5m for the year but C&C said that action has been taken on cost reduction and network optimisation is due to complete by the end of June 2021, both of which will deliver ongoing savings against the pre-COVID cost base.

C&C said that since the Brexit transition period formally ended on 31 December 2020, to date it has seen "minimal disruption" to its operations and supply chain.

C&C's chief executive David Forde

David Forde, C&C's group chief executive Officer, said the year to February presented "an extraordinary set of circumstances" which challenged the business, and the drinks industry, at every level.

"Our business model was proven during FY2021 as, during the periods of on-trade restrictions easing, we returned to profit and cash generation," David Forde said.

"C&C's brand strength was demonstrated by our core brands growing off-trade share, reflecting their special relationship to the consumers they serve," he added.

The CEO said that while he was confident in the company's business model and strategy for growth, the group continues to face uncertainty with the ongoing impact of Covid-19 across the hospitality sector.