IRISH drinks group C&C revealed yesterday that its Tennent’s lager business in Scotland saw export volumes leap nearly 13 per cent across Europe, Asia and Canada in its first trading half.
However, C&C chief executive Stephen Glancey, formerly an executive with Scottish & Newcastle Breweries, said half-time operating profits at the group edged down 2.7 per cent to €69.2m (£54.7m) as markets were tough for its products in England and America.
Glancey and chairman Sir Brian Stewart – a former boss of S&N – refused to give details of the company’s surprise takeover approach to the Spirit pubs group in the UK last week.
They would also not say whether an improved offer, potentially breaking up a near-agreed deal for pubs and brewing group Greene King to acquire Spirit, would be made by the City Takeover Panel deadline of Thursday, 20 November.
Operating profit in England and Wales was down 37 per cent, with Glancey describing the English cider market, where C&C has its flagship cider brand Magners, as “incredibly competitive”.
He said that Scotland and Ireland remained the “cornerstone” of C&C, representing 86 per cent of operating profit.
The performance north of the Border had been resilient, Glancey added, despite the task of integrating Wallaces Express after the group bought the 50 per cent stake in the Scottish drinks wholesaler it didn’t own last March. “The acquisition is on track to deliver expected returns and integration will be completed early next year. This will ultimately provide a strong foundation for growing our combined business,” he said.
Volumes in the US were down 21 per cent, with operating profit 90 per cent lower. C&C said it remained committed to the US market and also the UK cider market despite its competitiveness, where Magners goes head to head with Heineken’s Bulmers.
Shares in C&C fell yesterday and are down 12 per cent since the drinks producer announced its interest in Spirit’s 1,200 pubs last week shortly after the target gave qualified approval to the offer from Greene King, which owns the Dunbar-based Belhaven business.
David Holohan, drinks analyst at Merrion Capital, said: “The (share price) fall seems to be due to a combination of factors: a sharp deterioration in the US business, the fact that there is no guidance for the full year (under Takeover Panel rules) and a lot of uncertainty about the strategic rationale on the Spirit bid.”
However, Glancey, explaining the rationale yesterday, said: “Our route to market capability in Ireland and Scotland is not matched in England and Wales and the concept of vertical integration in the sector is well established.”
Stockbroker Goodbody said it planned to cut its forecast for C&C’s full-year profit by around 7 per cent.
C&C’s dividend per share rises 4.7 per cent to 4.5 cents.
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