Greene King reports strong like-for-like sales
Pre-tax profits increased 7.1% to £82.7m, while operating profits grew 6.1% to £122.7m and adjusted earnings per share increased 8.6% to 29.2p.
In the Retail arm, profits were up 17.4% and margin increased by 20 basis points to 20.4%.
"This growth was a healthy blend of volume growth of 1.7% and price, mix and spend per head improvements of 2.6%," Greene King said. "All our major sales categories performed well with food LFL sales up 4.9%, drink LFL sales up 3.8% and room LFL sales up 4.3%. In London, where we have been extending our presence over the last three years, LFL sales were up 8.6%."
Average weekly take grew by £1,000, or 6%, to £17,600. Operating profit was £83m, up 17.4%.
Greene King said it remains to track to reach 1,000 sites in the division.
During the period it acquired or transferred 20 sites and disposed of two non-core sites, taking the period-end estate to 972 outlets. "Of those new sites, seven were single-site acquisitions and three were new-build sites, including our first Hungry Horse leasehold site, on the Wirral, and ten were transfers from Pub Partners, including seven Meet & Eat sites."
In Pub Partners, its tenanted and leased division, average EBITDA per pub was up 3.9% as the size of the division shrunk by 58 sites. Revenue in the division declined 3.9% to £73.9m. Beer volume and rental income per pub were both ahead of last year. EBITDA was £36.2m, down 5.7%.
The number of temporary agreements was 28, against 71 at the same stage last year.
Greene King said it had 35 franchise or franchise-style agreements in place across both its Meet & Eat and Local Hero concepts. "During the period, we transferred seven Meet & Eat sites into Retail and our focus during the second half of the year will be expanding Local Hero into a further 15 sites. The combined house EBITDA ROI on these developments is 15.3%.
In Brewing & Brands, revenue grew 2.2% and its market share increased 50 basis points to 9.9%. However, results were hit in the period by "structural headwinds" including supplier cost increases for third party lager, which is "adversely affecting our free trade wholesaling business", particularly in Scotland; declining volume in the traditional parts of the on-trade market, particularly tenanted; above inflation input cost increases; and a reduction of almost 10% in the number of Pub Partners’ sites.
EBITDA in the division declined by 11.17% to £16.6m and operating profits fell by 13.5% to £14.1m.
Rooney Anand, Greene King chief executive, said: "Our team has delivered another strong trading performance driven by 17% profit growth in our retail division. We have continued to focus on providing excellent value, service and quality to our customers, while improving productivity and keeping tight control of costs. This has led to strong sales and profit growth, increased cashflow, improved returns and a stronger balance sheet.
"While we continue to see a challenging environment for the UK consumer, our strategy has been tailored for these conditions - we provide our customers with ‘everyday treats’ and value for money. We are confident we can generate further success and deliver sustainable earnings and dividend growth for our shareholders."
