Tennent’s lager maker C&C Group sees earnings in line with forecasts

Tennent’s Lager beer producer C&C Group said first-half profits were in line with forecasts.

The Dublin-based company, whose other products include the Magners and Bulmers cider brands, expects to report between €39m and €41m in underlying operating profit for the six months ending in August.

According to the company, this mainly reflects the “gradual rebuilding” of the profitability of its distribution division following a longer-than-expected software upgrade last year, which cost the company around 22 million euros in lost profits.

C&C also expects net revenue to decline 3 percent in constant currency, due to the sale of its NAB business in Ireland, lower contract brewing volumes and weaker cider volumes in Great Britain.

Revenue was partially offset by a strong performance of its Matthew Clark and Bibendum segments, as well as by good demand for its core and premium brands.

Tennent’s enjoyed volume and value share growth thanks to marketing campaigns coinciding with the European Football Championship, while sales of Menabrea beer and Orchard Pig cider rose by double-digit percentages.

Following the result, C&C expects to achieve its annual operating profit target of €80 million and “move” towards achieving €100 million in profits by 2027.

Over the next three years, the firm also plans to return €150 million to shareholders, including a €15 million share buyback tranche that begins today and runs until the end of January.

C&C said the share buyback was supported by the board’s “continued confidence” in its medium-term outlook and is the “most effective use of capital in the current environment.”

The FTSE 250 company also announced it had agreed to reorganise its commercial relationship with Budweiser Brewing Group, the British Isles business of drinks giant AB InBev.

Beginning in January, both parties will internally share their respective responsibilities for sales, marketing and distribution.

C&C will regain control and distribution of its cider portfolio in Great Britain, while AB InBev will gain control and distribution of its beer operations in the off-trade market in the Republic of Ireland.

The group’s trading update comes three months after it admitted to making numerous accounting errors dating back to the 2021 financial year.

As a result, C&C recorded €17m (£14.5m) in retrospective charges, including a €10m charge relating to inventory issues at its Clonmel cider manufacturing facility.

The company also warned of a possible 12 million euro charge related to “onerous Apple contracts.”

C&C CEO Patrick McMahon resigned over the matter because he was the company’s chief financial officer during the period of these accounting errors.

A search is currently underway for his successor.

C&C Group Shares rose 1.3 percent to 153 pence by mid-morning Monday.