Greene King delivers record full-year results

By John Harrington

- Last updated on GMT

Related tags Pub partners Sales Revenue

Greene King announced a fourth consecutive year of record results
Greene King announced a fourth consecutive year of record results
Greene King, the brewer and pub operator, has reported a 9.4% rise in pre-tax profits to £173.1m in the 53 weeks to 4 May, with the company saying it has now delivered four years of record results.

Revenue grew 8.9% to £1.3bn and operating increased by 7% to £265.6m. Adjusted for an equivalent 52-week period, pre-tax profits were up 7.4%, with revenues up 6.9% and operating profit up 5%.

Like-for-like sales in the managed Retail arm grew 4.1% in the year, led by food at +5%. The company added 45 sites to the Retail estate, taking it to 1,032, with Hungry Horse now at 226 sites.

The company said that after eight weeks of the new financial year, like-for-like sales in Retail were up 1.1%.

It also announced its intention to reduce its tenanted estate further, down to 750 pubs.

Momentum

Chief executive Rooney Anand said: “This performance mirrors the trends seen in recent industry reports, including the latest Greene King Leisure Spend Tracker, which showed a softening in GB eating and drinking out from April to May. We have also seen regional differences in trading with LFL sales at Metropolitan, our premium London pubs, up 7.4%, and LFL sales overall in the south up, while LFL sales in the north are down.”

Anand said: “Looking ahead to the rest of the year, we anticipate an improvement in LFL Retail sales and continued momentum in both Pub Partners and Brewing & Brands. We also expect to add 50-60 new Retail sites in the year. As a result, we are confident of achieving another year of strong progress.”

Pub Partners

In the tenanted division, Pub Partners, average EBITDA per pub across the year was up 5.2%, with core estate like-for-like net income up 2.2%. There were 148 disposals or transfers from Pub Partners and it sold a 275 site package after the year-end. The group said that LFL net income in its core Pub Partners estate was up 3.5% in the eight weeks.

Brewing & Brands

Core own-brewed volume was up 4.6%, with profit up 1.3%. Greene King’s volume share of the UK ale market was up 70 basis points to 11.3%.

Retail

The company added 48 sites to its Retail estate during the period through a combination of acquisitions and transfers from Pub Partners, at a total cost of £24.3m. At the year-end, it had a Retail estate of 1,032 sites, up from 888 sites when its expansion strategy began in 2009.

The group said that it had made “further, significant progress” on its non-core disposal plan in the year, selling, or transferring to Retail, 148 sites, taking the Pub Partners estate down to 1,165 sites, below what had been its strategic target of 1,200 sites.

In the year, the company increased its trading estate by a net 45 sites, having acquired or transferred in 48 sites and disposed of three non-core sites. Of those new sites, 14 were single site acquisitions, 19 were new-build openings and 15 were transfers from Pub Partners. The new-build openings included its first new-build site in Scotland and the 200th Hungry Horse site.

Record results

Anand said: “We have delivered four years of record results since the credit crunch and maintained this momentum over the last 12 months by giving our customers what they want, in the right way and at the right price.

“Profit growth of 12% in our largest business, Retail, was driven by strong like-for-like sales growth and by newly-acquired sites. Pub Partners and Brewing & Brands also performed well. As a result, we achieved strong earnings, ROCE and dividend growth for the year.

“There are now clear signs that both the UK economic outlook and consumer confidence are improving, although consumers continue to spend cautiously. While continuing to provide customers with great value for money, excellent service and industry-leading quality, we see the pace of change in how people eat and drink out of home quickening and so we are shaping the business for the future to benefit from the opportunities these changes will bring.”

Looking ahead

In addition to addressing current trends, the company said it had been working closely with the Trajectory Partnership, a leading consumer insight and futures consultancy, to analyse and identify forthcoming consumer trends in order to get a clearer understanding of how eating out and drinking out might change between now and 2025.

The main trends this has identified include:

  1. ‘Vertical families’​ – indicates the rising importance of inter-generational leisure occasions.
  2. ‘Digitalisation of leisure’​ – the increase in use of and access to technology in leisure.
  3. ‘Value hunters’​ – demonstrates that cost of living is likely to remain a central consumer issue.
  4. ‘Deregulation of life’​ – where different activities are less associated with specific times of day.

The group said that the implications of these trends for its business are significant and include the need to:

  • Develop sites and offers that cater for different generations at the same occasions.
  • Continue investing in digital platforms and itscolleague training programmes to meet the challenges of a more demanding consumer, providing instant feedback to other customers.
  • Maintain focus on delivering great value for customers, even as the economy improves.
  • Make sites more convenient for our customers by increasing the occasions they use our pubs by expanding our daytime offer and becoming less reliant on ‘traditional’ pub eating and drinking occasions.

Using the analysis of current and future consumer trends, the company said it will evolve its current strategy to accelerate its Retail expansion and to move beyond conventional pub offers.

Specifically, its future strategy will focus on six key elements:

  1. Open a minimum of 30 new Retail sites per annum.
  2. Reposition and simplify the existing Retail estate to optimise growth and returns.
  3. Further improve value, service and quality to our customers.
  4. Investigate options to diversify the Retail offer including potential acquisitions.
  5. Reduce Pub Partners to 750 sites.
  6. Maintain investment in Brewing & Brands to drive market outperformance.

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