Belhaven to celebrate 300th birthday
Unveiling full-year results for the Suffolk-headquartered group, which acquired Belhaven 13 years ago, boss Rooney Anand also expressed hope that the introduction of minimum unit pricing for alcohol in Scotland might encourage more drinkers back to the pub as the price gap with supermarkets and off-licences narrows.
While the group posted a fall in annual profits amid “unprecedented” cost rises for the pub business, it noted that trading had improved recently due to the World Cup and warmer weather, with like-for-like sales rising by 2.2 per cent over the last eight weeks.
Anand said: “While it is still early days, this positive momentum has continued into the new financial year, aided by good weather and popular sporting events.
“We remain focused on continuing to drive top line growth, developing a more efficient organisation and further strengthening our capital structure to deliver long-term value creation for our shareholders.”
The firm is to pursue a “high profile PR and marketing campaign” to mark Belhaven brewery’s 300th birthday in 2019. In its results statement, the group also pointed out that Belhaven Best remained the number one draught ale in Scotland and number four keg ale in the UK.
Group revenues for the year to 29 April were down 1.8 per cent to £2.2 billion, while adjusted profit before tax dropped by 11.2 per cent to £243 million. A dividend of 33.2p is unchanged on the year before.
Pub sales were down 1.2 per cent on a like-for-like basis, excluding the impact of snowstorms earlier in the year.
Anand said the business faced “unprecedented” cost increases, alongside weak consumer confidence and tougher competition.
In the year ahead, Greene King is expecting costs to rise by between £45m and £50m. To offset some of this, it is targeting savings of between £30m and £35m, much of it in areas such as procurement.
Paul Hickman, analyst at Edison Investment Research, said the group had been “somewhat battered” by the inflationary pressures and weaker consumer demand.
“Unfortunately, last year’s adverse trading conditions are giving way to more of the same in the current trading year,” he said.
“Pub operators face demanding and cost-conscious customers who require convenience and speed of service, and are increasingly aware of health and ask for fresh produce.
“The good news is that current period sales in the managed pub company operation were ahead 2.2 per cent for the last eight weeks, when admittedly the weather has been pretty helpful.”
Nicholas Hyett at Hargreaves Lansdown added: “A sprawling pub portfolio means debt still looks manageable. Despite the tough trading conditions, debt is actually falling, and while dividends might not be going anywhere quickly, they look fairly secure for the time being. That could make the 5.3 per cent dividend yield quite attractive.”