Fuller’s facing unappetising cocktail of Brexit, living wage and business rate increases despite outperforming the market in first half
Fuller's insisted it has "outperformed the market" in the first half of the financial year but cautioned that it faces an unappetising brew of Brexit, the onset of the National Living Wage and business rate changes.
Overall revenue at the pub operator and brewer grew 11 per cent to £197.6m in the six months to 24 September, up from £177.7m in the first half of 2015.
Like-for-like sales at its managed pubs and hotels business rose by 3.4 per cent, though this had cooled from 4.8 per cent in its last full-year statement. The group's beer and cider volumes, which include London Pride, fell four per cent in the period, on an avoidance of discounting, though revenues rose 19 per cent – reflecting a revenue contribution from Nectar imports – and operating profit rose eight per cent to £3.9m.
Read more: Fuller's profits jump on strong food sales
Adjusted profit before tax at the group rose six per cent to £22.8m and the group's interim dividend rose by five per cent to 7.25p.
The group said trading in the second half has been "good" so far, but tenanted inns sales declined two per cent and Fuller's Beer Company volumes fell five per cent. In July, the group announced it had appointed a new managing director to reinvigorate its beer company.
However, the group pointed to tough year-earlier comparisons from the 2015 Rugby World Cup, when drinkers turned out in their droves.
Fuller, Smith and Turner's share price was up one per cent this morning.
In the run-up to the EU referendum, the pub chain took on its vocal rival, JD Wetherspoon, warning a vote for Brexit would be a "significant risk to the viability of the business". JD Wetherspoon's boss, Tim Martin, vigorously campaigned for the UK to leave the EU and printed a slew of pro-Brexit beer mats. As a reminder, here are JD Wetherspoon's angry George Osborne-directed mats again:
You could say George Osborne got served by Tim Martin (Source: JD Wetherspoon)
Today, Fuller's chief executive Simon Emeny offered a tempered down statement on the impact of Brexit, the National Living Wage and increases in business rates.
There is no doubt that the UK economy is facing some significant challenge. The impact of increases in business rates and the National Living Wage, combined with uncertainty around the UK's departure from the EU, make for changing times ahead.
However, Fuller's has a long-term, strategic vision, a solid balance sheet and a predominantly freehold estate, which is well-invested and supported by excellent, engaged team members and dedicated, skilled management. These are the qualities needed to continue to delight and excite our customers, provide a good return for our shareholders and attract the best new recruits to our business.