Brewer remains on track

BREWING and pubs group Greene King remained on course for annual profits of more than £100million yesterday as it revealed that trading had remained in line with expectations since last November's shake-up in the licensing laws.

BREWING and pubs group Greene King remained on course for annual profits of more than £100million yesterday as it revealed that trading had remained in line with expectations since last November's shake-up in the licensing laws.

Bury St Edmunds-based Greene King said like-for-like sales at its 820 managed pubs for the 36 weeks to January 8 - including the busy Christmas and New Year period - were up by 1.6%.

Profitability within the division also remained strong with a trading margin of 20.8%, slightly up on the 20.6% reported by the group at the start of last month for the 24 weeks to October 16.

Like-for-like sales at Greene King's estate of around 1,200 tenanted and leased pubs was up by 2.2% with its margins also showing an increase from the half-year stage, up from 43.2% to 43.7%.


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The own-brewed volume within the brewing division at the 36 week stage was up by 8%, with sales of Greene King IPA up 5%, Abbot Ale up 6% and Old Speckled Hen up 10%. The trading margin remained stable at 22.7%.

The Scottish-based Belhaven business, acquired by Greene King in a £187million deal last August and reported as a separate division, also traded in line with expectations, said the group, with volumes of Belhaven Best up 8%.

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Greene King, which also acquired the Essex-based Ridley's business last year, said that synergies from the integration of Belhaven were also meeting targets.

Analysts agreed that yesterday's figures were in line with expectations but sounded a note of caution in relation to the potential impact on the Belhaven business of Scotland's ban on smoking in public, which comes into force shortly.

Greg Feehely of Altium Securities said: “Greene King paid the highest price for a business with the most immediate downside risk following the introduction of the Scottish smoking ban this March.”

However, Mr Feehely, said Greene King was on course to report underlying profits of £117.1 million for its financial year compared with £94 million at the same stage of 2005.

James Dawson of Charles Stanley said like-for-like sales from the two English-based pubs businesses appeared to have softened marginally from the half-year stage although this had been balanced by the improvement in margins.

With the initial impact from the Scottish smoking ban not being seen until the full-year year stage, Charles Stanley is currently pencilling in an annual profit of £119.1million.

At the half-year stage, Greene King reported a pre-tax profit of £55.8million, up 23% on the same period the previous year, on turnover of £359.9million, an increase of 19%. The group is due to report its results for the full year, to April 30, on July 11.

Yesterday's update from Greene King is much in line with news from elsewhere in the sector, with rival pubs and brewing group Wolverhampton & Dudley and pub chain giant Enterprise Inns also having reported trading in line with expectations over the Christmas period.

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