Rain pulls no punches as pub group sees profit forecasts fall

THE wettest British summer on record means Scotland's biggest independent pubs firm, Punch Taverns, will see full-year profits fall 2 to 3 per cent, the company said yesterday.

However, shares in Punch, which owns nearly 400 pubs in Scotland, 5 per cent of its overall estate, rose 18p, or 1.7 per cent, to 1,084p as it said it was considering a possible cash return to shareholders and demerger of its managed pub division, Spirit.

Giles Thorley, the group chief executive, said: "We could [demerge Spirit], we are not saying we will but we have noted it and we are keeping all of our options open.

"They could be demerging or they could be buying something else. We've got a free option.

"If the opportunity is more valuable to our shareholders then we will seriously consider it. If not, there are other opportunities."

Thorley said Punch was also considering returning money to shareholders. "We are pretty cash rich. If acquisitions are better value we will make acquisitions. If not, we could return it to shareholders," he said.

He said this flexibility meant the group felt under no pressure.

Punch also announced that its finance director, Robert McDonald, was to retire and would be replaced by former Matalan finance chief Phil Dutton, who will take up the role on 10 September.

Pub companies have been hit by torrential summer rain and the smoking ban in pubs being extended from Scotland to England and Wales this year. Punch said the smoking ban had had little impact but that the miserable summer meant that profits for the year would be 2 to 3 percent below its full-year forecasts.

On average, the company had been expected to post a full-year pre-tax profit of 286.6 million, according to a Reuters poll of 17 analysts.

"The weather was so bad it made beer gardens less appealing," said Thorley.

"Some pubs were damaged by the floods so were closed and others were closed because they had no water," he added, saying the firm's uninsured losses amounted to 1m.

Mark Brumby, a leisure analyst at BlueOar, said: "Clearly the wet summer derailed things a little but this is a relatively reassuring statement overall."

Stripping out pubs which it had refurbished, Thorley said Punch's like-for-like, same-floorspace sales in its remaining 887 centrally managed pubs rose 1 per cent, against 1.5 per cent at its 7,500 pubs run by independent landlords.

Including investments, managed like-for-like sales grew 3.5 percent. Tenanted investments grew 2.7 per cent.

Thorley said food sales in its managed pubs rose 5.9 per cent in the second half.

Turnover from beer rose over the year but volumes had dropped.