Fuller's sees profit rise, driven by managed division

Fuller, Smith & Turner, the London brewer and pubco, has reported a 10% rise in adjusted pre-tax profit from £26.6m (2010:£29.3m) for the 53 weeks to 2 April, driven by a strong performance across its managed pubs and hotels division. Revenues grew 6% to £241.9m (2010: £227.7 million),

Managed pubs and hotels operating profits were up 15% to £18.1m with like-for-like sales up 3.9%. It revealed that the eleven pubs it purchased in 2009 had performed well this year with sales up 20%.

The tenanted division, which has 196 pubs, saw a revenue grow by 3% to £26.9 million (2010: £26.1 million), despite disposing of seven sites during the year. However, like-for-like profits were down 1%.

This was due to operating costs growing more quickly throughout the year and consequently operating profits before exceptional items remained level at £9.9 million. The company said this was due in part to capping RPI linked rent increases to 3% to help their squeezed tenants and "the damaging effects of duty rises".

Fuller's said it had increased tenant retention during the period, with every tenant appointed on a substantive agreement during the past 12 months remaining in their pub. It reduced vacancies, with 87% of pubs let on substantive agreements.

The Fuller's Beer Company, which brews London Pride, saw operating profits decline by 1% to £8.8 million. Its own beer volumes were 2% lower than last year, although total beer volumes increased by 2%.

London factor​

Chairman Michael Turner said: "Over the last five years our adjusted earnings per share have grown 71% demonstrating the company's long term consistent out performance of the market.

"During this period the UK economy has endured the deepest trough since the Second World War and has still not recovered to its pre-recession level.

"With wages in the UK running behind inflation, our customers' incomes are being squeezed and we will have to work hard in the current year and beyond to earn their custom.

"We believe, however, that as the consumer is forced to become ever more discerning, our high quality offer of leading beer brands and well invested, often historic, pubs will be increasingly attractive and position us well for growth.

"We have the financial strength to invest further in new opportunities and should benefit from the "London factor" as the calendar turns towards 2012."

Good start​

The company said it has made "good start" to the financial year that was driven by the Royal Wedding, five bank holidays and generally very good weather.

Like-for-like sales in managed pubs and hotels for the nine weeks to 4 June 2011 have grown by 6.8%.

For the same period total beer volumes are 1% higher than last year. It expects to invest more than £31 million for the next year of which £20 million will be spent on projects within the existing pub estate and the brewery.