Greene King posts robust sales growth despite fall in profit after summer washout
Pub chain operator Greene King has posted a robust rise in sales for the full year, despite a slump in profit and the impact of unseasonable weather in the first eight weeks.
The figures
Group revenue rose 1.8 per cent to £2.2bn in the 52 weeks to the end of April.
Pre-tax profit dropped 12.5 per cent to £172.8m.
The firm posted a 2.9 per cent increase in like-for-like sales.
Net debt narrowed by £89m to £1.9bn.
Read more: Greene King shares fall despite sales growth during bumper Easter
Why it’s interesting
Today’s results were a mixed bag for the FTSE 250 pub group, which saw a return to “market outperformance” thanks largely to bumper trading during the World Cup last summer.
Greene King, which operates 2,900 pubs, restaurants and hotels across the UK, said sales growth in its pub company and brewing and brands divisions offset reduced revenue from property disposals.
But the Suffolk-based firm suffered a double-digit fall in statutory pre-tax profit due to increased finance and employee-related costs.
Without the impact of exceptional costs, pre-tax profit ticked up 1.6 per cent to £246.9m, at the top end of forecasts.
Greene King, which owns beer brands including Old Speckled Hen and Abbot Ale, warned trading over the first eight weeks of the year had been impacted by the poor weather.
The firm said it had made further progress refinancing the debt from its £774m takeover of Spirit Pubs in 2015.
Shares in Greene King rose 3.5 per cent following the announcement.
John Moore, senior investment manager at Brewin Dolphin, said it was a “reasonable” set of results for Greene King.
“But the key to Greene King’s future success will be continuing to simplify its business while refinancing and paying down debt which, although reduced, stands at four-times earnings before interest, tax, depreciation and amortisation – this feels too high given the need to re-invest and innovate in a challenging environment,” he said.
The pub chain said it will look to refocus its pub portfolio around four core brands, and sell off non-core parts of its large estate to fund investment in new sites.
The results are the first since the departure of Rooney Anand, who stepped down earlier in April after 14 years as chief executive.
George Salmon, equity analyst at Hargreaves Lansdown, welcomed new boss Nick Mackenzie’s simplification and cost-cutting strategy but warned of “clear headwinds”.
“Costs could well rise again, and an uncertain political and economic backdrop won’t help the dynamics of an already fiercely competitive pub and casual dining sector,” he said.
“Combine that with an anaemic top line, and the outlook for profit growth isn’t too rosy just now.”
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What Greene King said
Chief executive Nick Mackenzie said: “The business delivered good results last year, regaining trading momentum in Pub Company and returning to market outperformance while fulfilling a strong cost mitigation programme and making further progress refinancing the Spirit debenture.
“The existing strategy we have in place has led the business through challenging times. I am looking forward to building on Greene King’s strong foundations with a focus on innovation, on developing our people and on customer service to further enhance our brands and deliver sustainable growth for our shareholders.”