Greene King toasts 25% profits jump

PUBS and brewing group Greene King was yesterday toasting a 25% increase in annual profits following a busy year of acquisitions and growth.

PUBS and brewing group Greene King was yesterday toasting a 25% increase in annual profits following a busy year of acquisitions and growth.

The Bury St Edmunds-based group's turnover for the 52 weeks to April 30 totalled £818.6million, up 16% from £707.5million the previous year and including first-time contributions from Essex brewer Ridley's and Scottish-based Belhaven which were both acquired last summer.

Operating profit grew by 21% to £190.9million - representing a margin on sales of 23.3%, up 0.9% on the previous year - with profit before tax and exceptional items coming in at £119.6million, up from £95.7million.

Rooney Anand, chief executive, said: “There have been significant developments across all areas of Greene King over the last year and this is reflected in these record results, which demonstrate our proven strategy that delivers value for shareholders.”

Mr Anand paid tribute to the group's employees and licensees for their contribution to the results and said trading so far during the current year was encouraging.

The quality and strength of the Greene King business meant it was well placed to meet future challenges such as the impending smoking ban in England and the possibility of an increase in interest rates, he added.

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Pub Company, the group's managed pubs division in England and Wales, increased its operating profit by 9% to £102.1million, on revenue up 4% at £516.5million.

The operating profit margin of 19.8% was 0.9% up on the previous year, despite increased costs for energy, wages and Sky TV.

Food sales increased as a proportion of turnover to 27%, with initiatives during the year including extended availability in the later evening in response to the change in pub opening hours. Like-for-like sales within the division were 1.9% ahead.

Pub Partners, the tenanted and leased pubs division, delivered an 18% increase in revenue to £147.0million, with operating profit 19% ahead at £64.1million. The operating margin of 43.6% was up 0.4% on the previous year while like-for-like revenue was up 2%.

In line with the trend in the managed division, Greene King said it had supported its tenants in improving their dining offer, including a “Food Made Easy” programme.

The group's Brewing Company division increased its operating profit by 16% to £20.7million, on turnover up 4% at £90.3million.

The operating profit margin of 22.9% was 2.3% up on the previous year, which Greene King said reflected the benefits of scale from acquisitions together with organic sales growth and a programme of cost efficiencies.

Against the background of a 2% decline in the total beer market, including a 4% reduction in cask ale volumes, Greene King said its cask volume had increased by 4% while its total own-brewed volume - including bottled and canned ales - grew by 7%.

The group added that all its leading brands had performed strongly, with volume sales of Greene King IPA up by 3%, Old Speckled Hen by 10% and Abbot Ale by 5%.

Belhaven, which is being retained as a separate division embracing both pub and brewing operations in Scotland, contributed an operating profit of £12.5million for the first 30 weeks of Greene King ownership on revenue of £64.8million, representing a margin of 19.3%.

Greene King said was still “too early to accurately call the effect” of the ban on public smoking in Scotland as a result of variations in sales during the first three months of the new restrictions.

It added that it was currently assessing the risks and opportunities associated with the impending smoking ban in England on a pub-by-pub basis, with plans to invest in outdoor facilities as appropriate for each location.