Young's cautious but confident

London pub operator Young & Co has joined many of its rivals in predicting that trading conditions are unlikely to improve in the near future.

Announcing half year results to September 27, 2008, the group said that turnover up 3.7 per cent at £66.3m and operating profits marginally higher at £12.2m represented a "resilient performance in a challenging environment".

Young's adjusted pre-tax profits were up 9.4 per cent at £11.9m. Adjusted earnings per share were 0.2 per cent higher at 17.41p, while the group said it proposed paying an interim dividend of 6.12p, up two per cent.

Young's chief executive Stephen Goodyear said the effect of the poor summer weather "was compounded by the twin pressures of the economic slowdown, as consumers everywhere reined back their spending, and dramatic increases in operating costs".

Against this backdrop, "Young's has shown its mettle", Goodyear added.

Young's 122 managed pubs saw like-for-like turnover up 1.6 per cent in the first six months, although in the first seven weeks of the second half trading in its managed houses saw like-for-like sales dip 3.3 per cent.

In the current financial and economic circumstances Goodyear argued this was a "creditable performance".

The group's 100 tenanted pubs saw turnover flat for the six months.

Overall group food sales had risen nine per cent in the period, representing more than 25 per cent of total revenue, against 18 per cent five years ago.

Young's said the company's net debt amounted to £66.1m.

On the current trading environment, Goodyear said the recent interest rate cuts were welcome, but the effect of the reduction on consumer confidence would not be seen for some time.

"Accordingly, we are not anticipating that trading conditions will improve in the near term.

"But we have a cash-generative business, well-invested estate, great pubs in great locations and a conservative balance sheet. We believe this provides a sound platform for the immediate and long-term future of the business."