DUBLIN-BASED C&C Group continued to see its share price tumble yesterday as it defended its bid to buy Spirit Pubs. The company argued that it needs greater scale to battle competition in England as its profits dropped sharply.
Shares fell 7.8 per cent to €3.39, down nearly 15 per cent since C&C confirmed it had made an approach for Spirit, and to their lowest level in over two years.
C&C, the brewer behind the Tennent’s, Magners and Bulmers brands, reported a 2.6 per cent drop in profit to €64.3m (£50.8m) in the first half of the year to 31 August, dented by a drop in US trading and tougher competition in Britain.
C&C said volumes in the US – which accounted for just €0.7m of profit, down from €6.7m during the same period last year – were down 21 per cent in the first six months.
Profit in England and Wales was down by 37 per cent, while group revenue rose one per cent to €221.6m.
Chief executive Stephen Glancey defended the company’s pursuit of Spirit as key to improving the group’s presence in the English and Welsh markets.
“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. Against this backdrop the group are of the view that our commercial interests could be materially enhanced through direct participation in the management of high-quality retail assets,” he said.
“Such a combination would provide the group with the enhanced position in an important consumer market while offering a range of commercial options across all our domestic markets.”
No operating profit guidance was given due to the ongoing nature of C&C’s bidding for Spirit.
Investec analyst Ian Hunter said: “No forward guidance has been released given the Takeover Code, but on a first read through, we will be probably pulling back earnings per share numbers by two per cent to three per cent driven by the underperformance in the US.”