Belhaven owner says EU vote may dent drinkers' confidence
Greene King is taking a measured approach to Brexit, highlighting both threats and opportunities, after reaping the benefits of last year's record Â£774 million acquisition of rival Spirit.
Speaking after unveiling a surge in full-year turnover and profits at the pubs and brewing giant, chief executive Rooney Anand admitted the referendum outcome had introduced a “degree of uncertainty”.
He told The Scotsman: “If you talk to people in the industry who say it’s not going to have an impact I think they are being myopic. If you talk to people who say it is going to be doom-laden they must be trying to hide behind Brexit. I am trying to give a fact-based, experienced-based view.
“There is a degree of uncertainty and punters will be wondering what that means for the likes of jobs, interest rates and petrol prices.
“To balance that we are a British business and people will continue to eat and drink. We are in a very strong position, we have the capabilities, the brands and the teams.”
The Spirit deal – the biggest in Greene King’s 217-year history – helped push group revenues up 57.6 per cent to just over £2 billion while pre-tax profit leapt 52.2 per cent to £256.5 million.
A final shareholder dividend of 23.6p was recommended, giving a total payout for the year of 32.05p – up 7.7 per cent.
Anand said that all three of the group’s core divisions had grown their profits on an underlying basis, stripping out the impact of the Spirit acquisition. He described the past financial year as “transformational” for the business and said he was “quite pleased” with trade in Scotland.
Greene King – founded in 1799 and headquartered in Bury St Edmunds in Suffolk – is one of the industry’s biggest players employing some 44,000 people across its main trading businesses – Pub Company, Pub Partners and Brewing & Brands. It operates more than 3,000 pubs, restaurants and hotels across England, Scotland and Wales, with brands including Hungry Horse, Chef & Brewer and Flaming Grill. Beers produced by the brewery in Dunbar include Belhaven Best.
Anand said integration and synergies relating to the Spirit deal were ahead of plan, with £16.7m of savings delivered against a year-one target of £12m.
He added: “It has been a transformational year for Greene King. We completed the acquisition of Spirit Pub Company and reached the milestone of £2bn revenue. We have delivered growth across each of the three divisions, outperforming the market in a challenging environment.”
Citi analyst James Ainley, who currently has a “buy” rating on the shares, said trading at the group was strong, “for now”.
He noted: “We think [Greene King] with its strong margins, freehold asset backing, fixed rate debt and ongoing synergy benefits from the Spirit acquisition looks well positioned to ride the storm. Nevertheless we expect consensus forecasts will come under pressure in the coming days as analysts consider scenarios for UK consumer spending.”