Bury St Edmunds-based Greene King reports fall in first half sales and profits
PUBLISHED: 11:10 30 November 2017 | UPDATED: 16:06 30 November 2017
Pubs and brewing group Greene King has reported a fall in first-half revenues and operating profits amid “challenging” trading conditions for its managed pub estate.
Turnover across the Bury St Edmunds-based company for the 24 weeks to October 15 dipped by 1.2% compared with the same period last year to £1.031bn.
Pub Company revenues, covering the group’s directly managed pubs and restaurants, declined by 2.2% to £837m while the figure for Pub Partners, the tenanted and leased pubs division, was 1.6% lower at £92.1m.
However, the group’s Brewing & Brands division saw revenues grow by 7.9% compared with last year’s first half to £102.3m, with its own beer volumes edging 0.3% higher against a 3.4% decline in the overall ale market.
Operating profits from the managed estate fell by 11.4% to £136.9m and those from tenanted and leased pubs dipped by 0.2% to £43.6m while the figure for the brewing operation was unchanged at £14.8m.
This left overall group operating profits 2.5% lower at £172.1m and the pre-tax profit before exceptional items was 8.0% down at £127.9m.
At the bottom line, however, pre-tax profit was 33.7% higher at £123.7m compared with last year’s half-way stage when the figure was impacted by one-off finance and impairment costs.
Greene King, which is the UK’s largest operator of managed pubs following its £774m acquisition of the Spirit Pub Company in 2015, said Pub Company had been affected by a range of factors including increased discounting by competitors and poor weather during August and September.
However, it said it had taken a number of measures in response and the division’s performance had improved in recent weeks. Meal bookings for Christmas Day were also 3% compared with last year, it added.
Greene King chief executive Rooney Anand said: “The first half was challenging for our managed pubs, but our actions to strengthen performance have produced an improvement since the period end.
“We have committed additional investment to enhance the customer experience, including being more competitive on price, having more team members available at key times and strengthening local marketing activity.
“Pub Partners and Brewing & Brands again outperformed the market, generating cash for the group and raising the profile of Greene King.”
He added: “We will continue to benefit from our ability to generate significant cost savings and to improve investment returns to over 25% from rebranded pubs. Greene King is a strong, competitive business with industry-leading brands, a strong and flexible balance sheet, a sustainable dividend and an excellent track record of outperforming in challenging conditions.
“We are adapting our strategy to ensure we continue to sustain our long-term competitiveness, strong cash generation and attractive returns to shareholders.”
Greene King will pay an interim dividend of 8.8p per share, unchanged on last year’s first half.