Brewery Greene King had a strong six months to mid-October, after successfully integrating its latest purchase into the business.
During the 24 weeks to 18 October, Greene King's pre-tax profit rose by 46.9 per cent to £121.3m, driven mostly by its acquisition of pub group Spirit Pub Company for £774m in July. It said integration was taking place “ahead of plan”.
However, it was not the only factor that brought success to the company – once the purchase was accounted for, pre-tax profit was £87.5m – 5.9 per cent higher than in 2014.
Total revenue for the business was 5.4 per cent higher at £648.4m, while like-for-like sales went up two per cent.
The news went down well with investors, with share price shooting up more than seven per cent to 912 pence when markets opened.
Why it's interesting
By purchasing Spirit Pubs earlier this year, Greene King has become Britain's largest pub and restaurant chain company. The transaction brought an additional 416 pubs into its portfolio, bringing its total establishments to more than 3,000.
The positive results are a big boost for the Suffolk-based company during a testing time – in April it must introduce the living wage, which could knock its profits, and the “beer tie” is about to expire – the rule that ensured certain pub managers purchased the company's beer.
What Greene King said
Chief executive Rooney Anand described it as a “strong” first half, with “significant progress” made.
Like-for-like sales growth in Greene King Retail improved during the half and both Pub Partners and Brewing & Brands delivered profit growth and margin expansion.
We completed the acquisition of Spirit Pub Company and, by combining the best of both companies, made good progress in capturing value from the acquisition and creating the UK's leading pub hospitality company.
Greene King's acquisition and integration of Spirit has gone swimmingly so far, but the company has some struggles ahead. The positive results indicate it is in a good position to overcome them.