Pub group Greene King may be feeling like it had one too many last night, as its share price took a battering this morning on news of disappointing results.
Greene King's group revenue was down 1.2 per cent to remain just above the billion mark, at £1.03bn. Operating profit took a larger tumble, down 7.5 per cent year-on-year to £188m.
Like-for-like sakes were down 1.4 per cent in the key pub company, although there was growth in the brewing and brands division.
Net debt, however, did decrease slightly to £2.12bn as the dividend remained fixed at 8.8p.
Why it's interesting
With headwinds such as the increasing living wage, lower consumer spending in pubs and rising business rates, investors weren't expecting much from Greene King's results. But shares still sank by more than two per cent in morning trading.
In a call with journalists, chief executive Rooney Anand said the business would dedicate £10m to improving the business over the next year. He said the money would be dedicated to improving “customer experience”, such as by increasing staffing numbers and offering more promotions.
Anand added that Greene King was on track to deliver between £40m and £45m of cost savings.
The business, which employs around 40,000 people across its main trading businesses, will also be reducing its food exposure, de-branding its Fayre & Square outfits by the year-end.
Greene King's announcement would have been particularly hard to swallow for any investors watching pub company Marston's, which today released glowing results. Anand declined to respond to questions regarding the divergence between the two pub companies.
What Greene King said
“The first half was challenging for our managed pubs, but our actions to strengthen performance have produced an improvement since the period end,” said Anand.
“We will continue to benefit from our ability to generate significant cost savings and to improve investment returns to over 25 per cent from rebranded pubs. Greene King is a strong, competitive business with industry-leading brands, a strong and flexible balance sheet, a sustainable dividend and an excellent track record of outperforming in challenging conditions.”