Greene King sees profits warm up

UNSEASONABLY warm autumn weather has given a boost to Belhaven Brewery owner Greene King and provided a renewed tailwind for one of the most impressive dividend records in the pubs sector.

The City is expecting resilient interim results from the group, the only major pubs business to maintain and grow its dividend through the 2008/09 recession, while the likes of Punch and Mitchells & Butlers have scrapped divi payouts in favour of paying down debt.

Paul Hickman, leisure analyst at broker Peel Hunt, forecasts a 7 per cent rise in GK’s annual pre‑tax profits to £149.5 million from £140m last time, and a further 5 per cent rise in the total dividend to 23.7p.

“They will be reasonably upbeat this week. Also, at the current share price it puts GK on a dividend yield of 5.4 per cent, which is very useful in these difficult economic conditions,” he said.

James Dawson, drinks analyst at broker Charles Stanley, said: “October was very mild, so Greene King should have benefited from people eating and drinking outside at its pubs.

“And while the company does not have such a food‑led offering in Scotland, punters are still spending north of the Border on the wet‑led [drinks-driven] element, which remains very important.

“Another different dynamic in the Scottish pubs is that cask ale is not the be-all-and-end-all it is increasingly becoming in England.”

The company’s estate is heavily skewed to the south of England, but expanded into Scotland with the £187m takeover of Dunbar‑based Belhaven in 2005.

Like‑for‑like sales jumped a highly respectable 4.3 per cent in the ten weeks to 4 September, driven by a 4.7 per cent rise in food, and was followed by the warmest late September and early October since 1895.

Hickman said GK benefited from a strong London presence, underpinned by the recent acquisition of Capital Pub Company.

“Exposure to London and the south of England is undeniably a positive, even though we see a bleaker economy in 2012,” he said.