Shares in C&C Group dropped by more than 10% today (13 January) after the Ireland-based brewer struck a cautious tone on profits.

The Magners and Tennent’s maker published a forecast for annual operating profit that fell below market expectations.

In a trading update covering the important December sales period, C&C Group also revealed it expects its operating profit to come in between EUR84m (US$90.9m) and EUR88m.

That compares to EUR47.9m a year earlier but also contrasted with an analyst consensus forecast of around EUR95m, Shore Capital’s Greg Johnson said in a note this morning.

Johnson, who had estimated C&C Group’s full-year operating profit would reach EUR89.9m, added: “Although the update is disappointing and we remain cautious over the near-term outlook, we do not believe that the current valuation (circa eight times EBITDA) reflects the progress the group is making.”

At 15:13 GMT today, C&C Group’s share price stood at 164.84p, down 10.32% on the day before.

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In the Magners maker’s statement, the company said it had flagged a “potential significant impact from the continuing cost-of-living pressures facing consumers” when it booked its half-year results in October.

During that period, which covered the six months to the end of August, net revenue was up 35.6% at EUR903m. Operating profit more than trebled to EUR54.9m. Net profit was EUR37.4m, compared to EUR5.8m the year before, as the owner of the Matthew Clark distribution business lapped a period when the on-trade was hit by the depths of the Covid-19 pandemic.

C&C Group’s trading update today carried the news the company had seen “year-on-year net revenue growth of circa 20%” in December.

It added: “We believe consumer spending pressure is a driver behind this trading performance and will continue to be so in the near term. Further, trading has been significantly impacted by rail network strikes in the UK, reducing footfall in urban areas over the key festive trading period.

“Despite the near-term challenges, the group will continue to operate well within its stated leverage range – less than two times – and this coupled with our strong free cash flow generation will ensure that our stated capital allocation objectives are maintained. C&C will continue to review and drive efficiencies throughout our business while ensuring we deliver a market-leading offering to our customers and consumers.”