Belhaven proves to be the Best for owner Greene King

Published on Monday 6 September 2010 21:51

GREENE King toasted the popularity of its Dunbar-brewed Belhaven Best yesterday after the beer continued to grow its sales in a declining market.

Volumes of Best sold in the 18 weeks to 5 September rose by 3 per cent, compared with a 0.3 per cent increase for the group as a whole, according to figures released to coincide with yesterday's annual shareholder meeting.

The increases come against a declining beer market, with data from the British Beer and Pub Association showing an 8 per cent fall in ale sales in the three months to July.

Analysts at Numis noted that growth in Best volumes had slowed from 7.1 per cent in the first eight weeks in the period, implying a slight fall in the past ten weeks.

But they added that like-for-like sales in the Belhaven managed pub business were accelerating, up 3.3 per cent in the period and 4.7 per cent in the past ten weeks.

Greene King bought Belhaven in 2005 for 187 million. The Scottish firm had been owned by the Dudgeon family until 1972 and had floated in 1996.

The group's retail business - which accounts for about 70 per cent of revenues - has continued "trading well" with like-for-like sales up 4.4 per cent at Greene King Retail and 3.3 per cent at Belhaven Retail.

Like-for-like food sales rose 8.6 per cent as the firm continued to expand its meals provision, yesterday's figures revealed.

Greene King said: "This strong sales growth and focus on food has not been at the expense of margins, which are slightly ahead of last year.

"Overall, operating profit, cashflow and the balance sheet are strong, and in line with our expectations.

"The pubs acquired over the last year are trading very well and investment in our existing brands and formats is delivering healthy returns."

But the group warned that the consumer and economic outlooks remained "uncertain", highlighting the effect on household spending of next year's rise in the VAT rate, looming public sector job cuts and state benefits reform.

Greene King added: "However, we are confident of delivering another successful year for our shareholders, in which we will continue to expand our retail businesses and to invest in our brands to generate market share gains and deliver industry outperformance."

Nigel Parson, an analyst at Evolution Securities, said: "Greene King reported excellent but slowing metrics - a trend that will continue.

"The second half looks tougher with consumer belt tightening, public-sector cut-backs and 20 per cent VAT on the radar.

"We are positive on the stock but the share price may not even flicker the market's approval this time and we have nudged down our target price to 470p from 480p."

In July, Belhaven posted an 8.3 per cent hike in operating profit to 32.7m for the year to 2 May, on an 11.7 per cent rise in sales to 152m. Group revenues at Greene King - which also brews Greene King IPA, Abbot Ale and Old Speckled Hen - rose by 3.1 per cent to 984.1m, with pre-tax profits up 3.8 per cent at 123m.