Belhaven owner Greene King cheers rise in profits
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The Belhaven owner said it outperformed the market with like-for-like pub sales up 1.5 per cent, while underlying profits lifted 6.6 per cent to £273.5 million in the year to 30 April.
It outlined a raft of challenges affecting the pub and brewing industry over the next few years, which it said are set to “intensify” amid weakened consumer confidence caused by surging inflation.
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The group said it believed visits to the pub will remain an “affordable treat” despite cash-strapped consumers cutting back on spending elsewhere.
It also hopes the group’s bigger scale since taking over rival Spirit Pub Company for £774m in 2015 will continue to help it withstand surging cost pressures.
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Greene King is bracing for costs to rocket by about £60m over the new financial year, but it has plans in place to offset up to £45m of the rise.
Chairman Philip Yea said: “Uncertainty affecting both business and consumer confidence is likely to continue following the recent election and the unknown length and outcome of the Brexit negotiations.
“Alongside the rest of the industry, we are experiencing significant cost pressures but Greene King’s scale and the consequent cost efficiencies, not least from the Spirit integration, should enable us to mitigate much of the cost increases.”
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Hide AdIt completed the integration of the Spirit business a year ahead of schedule, which saw it make £35m of savings in the year. But costs of the integration, alongside historic tax settlements with HM Revenue & Customs, saw bottom-line pre-tax profits sink 2.6 per cent to £184.9m.
Suffolk-based Greene King, founded in 1799, said its leased pubs saw net annual profits rise 5 per cent, although they had suffered a slower start to the new year due to tough comparatives from a year earlier following the Spirit deal.
Beer sales by volume of its own brands have returned to growth in the first eight weeks, following a fall of 2.8 per cent during the year.
Analysts at Singer said Greene King’s full-year results were in line with expectations, but noted the group’s fears over a “difficult trading environment persisting for a few years” and mixed comments on current performance.
Greene King has more than 1,760 managed pubs, restaurants and hotels, as well as over 1,150 leased pubs and a brewing arm. It employs around 44,000 staff.