Search Share Prices
Greene King profits to fall as snow dilutes pub sales
Pub operator and brewer Greene King said full year profit could fall 10-12% after pub sales worsened in the last few months of the year amid a continued "challenging" market.
With three weeks of the year to go, the FTSE 250 company said it expects its final profit before tax and exceptionals measure to come in at £240-245m.
In the 49 weeks of the year to 8 April, the decline in pubco like-for-like sales has worsened to 1.8% from the 1.4% seen in the post Christmas update.
In the Pub Partners arm, where around more than 1,200 pubs are operated by independent licensees, LFL net profit was down 0.3% after 48 weeks, having been up 0.2% at the 37-week update.
Even though trading over Easter was strong, with LFL sales up 2.8% against the Easter last year for the managed pubco business, there was no resurrection for Greene King as weather over the last 12 weeks made a particular impact on trading in food-led 'destination pubs'. It reckoned that if it were somehow to exclude the impact of snow, LFL sales would be down 1.2%.
Notably, both drink and accommodation LFL sales were ahead of last year for managed pubs and chief executive Rooney Anand was seeing a "positive impact" beginning to appear from his £10m investment in the second half of the year to cut prices, improve customer service and quality, though it was emphasised that the market backdrop continues to be "challenging".
Three new pubs have been opened since the last update, taking the total to nine for the year, with capital investment also made in "core and brand conversion" in 292 older pubs.
Anand's efforts to reposition the pub company to return to growth will also see the exit from the Fayre & Square restaurant chain before the end of April, a chain that arrived as part of the ill-fated Spirit Pub Company acquisition from 2015.
Own-brewed volumes in Brewing & Brands were down 0.7%, ahead of the UK ale market* at -3.1% and an improvement on the 0.9% decline seen at the their quarter.
"We remain on track to deliver targeted cost savings of £40-45m, we will have spent c. £160m in the full year in ensuring our estate remains well invested and our disposal proceeds are likely to be ahead of expectations at c. £120m following the sale of three high value leasehold pubs," the company said.
"With our high quality portfolio of pubs, excellent team, strong balance sheet and sustainable dividend, we remain well placed to withstand the external market challenges and deliver long-term value to our shareholders."