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Greene King reports strong annual results

By MCA , 29-Jun-2017

Future plans: Greene King chief executive Rooney Anand said the pubco will target further market outperformance

Future plans: Greene King chief executive Rooney Anand said the pubco will target further market outperformance

Greene King has this morning reported a 1.5% increase in like-for-like sales across its managed division in the 52 weeks to 30 April 2017, driven by a good Christmas, a stronger fourth quarter and a strong performance from its Greene King Locals pubs.

  • It reported a record revenue, up 6.9% to £2,216.5m, and operating profit before exceptional and non-underlying items, up 4.9% to £411.5m.
  • Profit before tax, exceptional and non-underlying items grew 6.6% to £273.5m.
  • Earnings before interest, tax, depreciation, and amortization (EBITDA) surpassed £500m for the first time in the company's history, reaching £524.1m, up 5.5% on last year.
  • Total sales growth in Pub Company was 7.7%, while operating profit grew 3.0% to £308.1m. 11 new pubs were opened during the year while 65 disposals were completed.
  • It also highlighted a record performance from its leased and tenanted Pub Partners arm, with like-for-like net profit up 5%.
  • Pub Partners revenue was up 5.8% to £198.8m. Average EBITDA per pub increased 7.9%, reflecting “further improvements in estate quality as a result of the Spirit acquisition, the disposal of 54 pubs from the combined estate and synergy contribution”.
  • Brewing & Brands revenue was up 1.7%, whilst own-brewed volume (OBV) was down 2.8%.
  • The integration of Spirit was completed a year early with annual cost synergy realisation of £35m.
  • In the year, the company spent £30.2m on brand conversions with 63 pubs successfully converted to more suitable brands within the combined Greene King portfolio. The average sales uplift for these pubs is over 30%.
  • It expects to make annual investments of £30m to £40m in brand conversions between F18 and F20.
  • The company has 27 MRO applications currently going through the adjudication process and at the year end had no MRO agreements taken.
  • In the first eight weeks of the year, it said that Pub Company (managed) trading had been in line with its expectations, “bearing in mind the tough comparatives from last year”. Pub Partners has seen a slower start to the year but this was anticipated as it starts to annualise the benefits from the Spirit integration.
  • Brewing & Brands has returned to OBV growth with a strong start to the year in the take home, free trade and export channels.

Rooney Anand, chief executive, said: "Greene King has delivered another set of record results, generating full year EBITDA of over £500m for the first time. The team has worked hard to maintain momentum during the period and successfully completed the integration of Spirit a year ahead of schedule. This has led to a stronger, more competitive business with an industry-leading portfolio of brands.

"Our performance has been achieved against a demanding backdrop of increased costs, weaker consumer confidence and increasing competition. While I expect these challenges to intensify over the next few years, Greene King has a very strong track record of delivery in tough market conditions.

"Using the scale that the Spirit acquisition has brought, we will continue towards our aim of being the best pub company in Britain. We will achieve this goal by ensuring we have the best brands, the best invested estate and the best people in the industry. We will target further market outperformance, in a growing market, supported by additional cost efficiencies, a robust balance sheet and strong cash generation to deliver long-term growth and attractive returns for our shareholders."

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