Update: Bury St Edmunds-based Greene King posts increased first-half sales and profits
12:03 04 December 2012
ADAM SMYTH PHOTOGRAPER
PUBS and brewing group Greene King continued to defy the UK’s harsh economic conditions as it posted a 7.1% increase in half-year profits.
The Bury St Edmunds-based group reported revenues of £566.2million for the 24 weeks to October 14, 7.3% up from £527.5m in last year’s first half.
Underlying pre-tax profits, excluding one-off elements, rose from £77.2m to £82.7m while the bottom line figure was 48.7% ahead, at £84.3m against £56.7m, largely reflecting £20.5m of exceptional charges taken at last year’s half-way stage.
Sales from the the group’s powerhouse retail division grew by 10.9% in total and by 4.3% on a like-for-like basis, with retail profit up 17.4%.
Average earnings from its leased, tenanted and franchised pubs were 3.9% up while revenues from its brewing and brands division were 2.2% ahead.
Greene King chief executive Rooney Anand said: “Our team has delivered another strong trading performance driven by 17% profit growth in our retail division.
“We have continued to focus on providing excellent value, service and quality to our customers, while improving productivity and keeping tight control of costs. This has led to strong sales and profit growth, increased cashflow, improved returns and a stronger balance sheet.”
He added: “While we continue to see a challenging environment for the UK consumer, our strategy has been tailored for these conditions – we provide our customers with ‘everyday treats’ and value for money.
“We are confident we can generate further success and deliver sustainable earnings and dividend growth for our shareholders.”·
Greene King Retail, which consists of the group’s directly managed pubs and restaurants, saw revenue increase by 10.9% to £407.4m and operating profit by 17.4% to £83.0m.
The division was operating 972 sites at the end of the period, an increase of 20 resulting from a mix of acquisitions and transfers, representing a further step towards the group’s target of extending its retail estate to 1,100 properties.
Like-for-like sales across the division were 4.3% ahead, including growth of 4.9% from food, 3.8% from drink and 4.3% from rooms.
At Pub Partners, Greene King’s tenanted, leased and franchised pubs division, revenue fell by 3.9% to £73.9m and operating profit by 6.6% to £32.4m.
However, the average number of pubs trading was 9.4% lower, at 1,349, reflecting a continued programme of disposals to improve the quality of the estate. Earnings per pub were 3.9% higher, with beer volume and rental income per pub also ahead of last year’s first half.
The Brewing & Brands division, based on the group’s brewery operations in Bury St Edmunds and Dunbar, recorded a 2.2% increase in revenue, to £84.9m, but operating profit dipped by 13.5% to £14.1m.
Greene King said the brewing business faced a number of “headwinds”, including the reduced number of Pub Partners sites, declining volumes in the traditional part of the wider on-trade market and above-inflation input cost increases.
However, the decline in own-brewed volumes was restricted to 0.9%, against a 3.0% fall in the overall UK ale market, and key brands Old Speckled Hen and Greene King IPA achieved volume growth of 5.9% and 2.2% respectively.
Volumes were assisted by continued moves to reposition the division towards the growth channels of take-home and export, which together accounted for 37% of sales compared with 27% five years ago.
Greene King added that current trading was also proving “resilient”, with like-for-like sales up 2.2% over the last six weeks.