Greene King praised in analysts’ report

SUFFOLK-based pubs and brewing group Greene King has topped the table in a report on how major players in the pubs sector have performed over the past six years.

According to analysts from Deutsche Bank, the Bury St Edmunds company has successfully used its balance sheet, and the proceeds from a rights issue of new shares, to increase its earning by 113% over the period.

The spread of performances across its five main rivals, Mitchells & Butlers, J D Wetherspoon, Marston’s, Enterprise Inns and Punch Taverns, is said to have ranged from 40% growth to a 2% contraction over the same period.

“Coupled with the best ROI (return on investment) performance and sector-leading momentum in each of its three businesses as far as current trading is concerned, we see Greene King as being best placed to cope with the future,” says Deutsche Bank in an industry update.

Greene King’s managed pubs division came out best on seven out of eight measures applied in the survey, with Mitchells & Butlers topping the eighth.

The Suffolk company also scored highest in one of the four measures for tenanted and leased pubs, with Marston’s claiming the other three, but Greene King turned the tables to beat Marston’s on each of the three measures in the brewing category.

The report also notes that Greene King is the only group in the pub sector to have maintained and grown its dividend payments during the last three years, as well as maintaining its capital expenditure levels at time when its peers were either significantly reducing both capital schemes and dividend payouts or stopping dividends entirely.

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And it adds that the proceeds of Greene King’s rights issue in April 2009 have been used effectively to provide a platform for further growth.

Deutsche Bank says it was always sceptical about the company’s plans to apply part of the proceeds to the repurchase of debt and that the number of pubs put up for sale by distressed rivals fell short of expectations.

But it adds that “generally we see the investment of the proceeds as providing a springboard to better growth rates both for the managed estate and the group.”