Greene King posts "strapping" interims

BREWER and pub group Greene King today released interim results to toast, with profit before tax increasing 17 per cent to £73m.

The better-than-expected results were driven by strong food sales and expansion of its managed pubs arm, and saw group revenues rise 4.2 per cent, to £484m from £464.5m a year earlier, in the quarter to 17 October.

It also announced that Scottish division Belhaven, which outperformed with profit up ten per cent, will be fully integrated into the group to generate £1m in annualised cost savings.

“Current trading remains strong, with Christmas bookings comfortably ahead of last year. Although we expect more challenging conditions in 2011, we are confident that we will continue to trade well,” said chief executive Rooney Anand.

Alistair Macdonald, Execution Noble analyst, described the results as “strapping” and said profit before tax was well ahead of consensus estimates of £67m.

“Current trading looks to be resilient with like-for-like sales in Greene King retail up 3.8 per cent for the 30 weeks to end November, implying that the two-year like-for-like trend from the first half has continued into more recent weeks,” he said.

Suffolk-based Greene King operates both managed and tenanted pubs and is – like several of its rivals – pursuing a strategy of increasing food spend and its managed pub estate while reducing its tenanted pub estate.

Managed pubs – where the owner operates the venue, often under a brand name, have proved more resilient in the recession than tenanted pubs as they can achieve greater flexibility and speed on promotions and more consistent levels of service and quality.

Its managed pub division, the UK’s third-fastest-growing managed pub business, saw like-for-like sales growth slow slightly to 3.8 per cent from 4.6 per cent a year earlier, but like-for-like food sales increased 8.5 per cent.

Its tenanted division, Pub Partners, stabilised with 0.4 per cent profit growth, while Belhaven, which it bought in 2005, achieved £17.5m operating profit.

The group’s earnings per share rose 11.5 per cent to 25.2p from 22.6p and dividend was raised 6.8 per cent to 6.3p per share.

Greene King operates 891 retail pubs and more than 1,500 tenanted or leased sites in the UK.