Belhaven best for Greene King as it snaps up seven more Scottish pubs

Published on Tuesday 1 December 2009 20:39

GREENE King will continue to seek pub acquisitions north of the Border after swallowing seven more outlets and raising a glass to double-digit sales growth at its Belhaven brewing arm.

Unveiling a 12.7 million deal to take on pubs in Edinburgh, Glasgow, Aberdeen, Stirling and St Andrews from rival Mitchells & Butlers, group chief executive Rooney Anand said the firm was "absolutely committed" to growing its Scottish presence.

"Belhaven was a great business when we bought it in 2005," he said. "The pub estate is well invested, there is a strong management team and they've stuck to their knitting.

"Since becoming part of Greene King, we haven't changed any of the really good bits of the Belhaven formula but we have invested money to expand the estate."

His comments came as Greene King, which paid 187m to acquire Dunbar-based Belhaven four years ago, posted solid first-half numbers. Against a backdrop of recession, smoking bans, hikes in beer taxes, poor weather and cheap alcohol offers in supermarkets, the group managed to increase its revenues by 4.3 per cent to 464.5m. Pre-tax profits during the 24 weeks to 18 October rose by 2.8 per cent to 62.4m.

The star performer was Belhaven – a 290-year-old business that is proving its worth to its Suffolk-based parent. Revenue there grew 14.6 per cent to 72.2m, while operating profit rose by almost 9 per cent to 15.9m.

A strong performance at the 327-strong pubs business was driven by buoyant food sales – up 26.4 per cent on a like-for-like basis.

Anand said that since the 2005 takeover, sales of food in the Scottish pubs had trebled.

Sales volumes of Belhaven's most popular product – Belhaven Best draught ale – rose 15.7 per cent during the period, against an annual 3.6 per cent decline in the Scottish ale market.

The group said that had slowed slightly to 14.6 per cent growth in recent trading.

"Best is a fantastic story," Anand said. "We have just shy of 25 per cent market share (in the Scottish ale sector]. That means we still have three in four drinkers to go for."

Anand reiterated the group's commitment to the historic Dunbar site, after news earlier this year that some bottling operations were being switched to Suffolk.

"We were very open at the time of the acquisition, stating that we were absolutely committed to a Scottish presence, a Scottish team and a Scottish brewery," he said. "And we haven't wavered in our commitment on any dimension."

Greene King – Britain's fourth-biggest pubs company with some 2,400 outlets – maintained its interim shareholder dividend at 5.9p.

KBC Peel Hunt analyst Paul Hickman moved the company to "buy" from "hold", saying: "Second-half trading has started strongly and the latest pub acquisition reassures us on the spend of rights issue money."

Greene King launched a 207m rights issue in April.