Greene King has seen total revenue for its half-year grow above £1bn for the first time.
Its interim results for the 24 weeks to 16 October showed total revenue up 13.8% to £1.04bn, with profit before tax and exceptional items up 14.6% to £139m.
It’s managed Pub Company division grew like-for-like sales 1.3%. Excluding Fayre & Square, which the group stressed was under-performing the market when it was acquired and is currently being debranded, like-for-like sales in Pub Company would have been up 1.9%.
The company said it had continued to make progress in developing its five growth pub retail brands: Greene King; Chef & Brewer; Farmhouse Inns; Flaming Grill; and Hungry Horse. Integrated menus across similar formats have been introduced and the process of replacing noncore formats such as Taylor Walker, John Barras, Meet & Eat and Flame Grill with Greene King has begun.
The group said that in both food and drink, it increased prices below the market and Retail Price Inflation by extending ‘Every Day Low Pricing’ and ‘Key Value Item’ pricing into the Spirit brands and formats and by optimising the balance between core pricing and promotional activity. It rolled out its Season Ticket loyalty scheme into 104 Flaming Grill pubs and refocussed on ‘Big Plate Specials’ and ‘Rhythm of the Week’ activity in Hungry Horse.
Tenanted arm Pub Partners like-for-like net income was up 4.2% for the period. Like-for-like volumes were slightly down but ahead of the UK beer market, while like-for-like rent was up, which Greene King said was aided by continued capital investment and the growing number of turnover agreements in the estate (now accounting 12.6% of all agreements). Pub Partners operated 10.6% more pubs on average but achieved revenue growth of 14% and operating profit growth of 19.1%. Average EBITDA per pub was up 5.8%.
The company said synergies from the Spirit conversion were expected to reach £30m this year with the original three-year target set to complete in two. There were 50 brand conversions completed in the period, resulting in an average sales uplifts of over 30%
The group said trading in Pub Company had improved since the period end, compared to Q2 with sales in Pub Partners and Brewing & Brands in line with H1. Deposited bookings for key festive dates are ‘up strongly’ on last year, the group said.
Greene King said that after three months of the pubs code, it had 24 potential Market Rent Only option agreements, which it said was in line with expectation.
On Brewing & Brands, the group said: “Own-brewed volume fell 3.8% in a cask ale market down 5.4%1 and a total ale market down 3.1%2 as we proactively reduced our exposure to low margin accounts in the on- and off-trade channels, leading to volume declines for Old Speckled Hen and Ruddles. As a result, revenue fell 0.6% to £94.8m. Overhead recovery from higher total volumes helped to drive a 20bps improvement in the operating margin and operating profit up 0.7% to £14.8m.”
Chief executive Rooney Anand said: “We have delivered market outperformance and strong integration momentum against a backdrop of continued challenging market conditions. Our performance has been driven by growth in all divisions and the synergy benefits from the integration. These have helped to offset increased cost pressures, particularly from the National Living Wage, as well as additional investment in the customer offer to meet higher guest expectations of value, service and quality.
“The full impact of the UK decision to leave the EU remains unclear. Looking ahead, increasing levels of consumer uncertainty, further cost pressures and the changing dynamics of eating out, mean the consumer environment is likely to become more challenging. However, we are confident that the strength of our brands, pubs, people and cash generation leaves us well placed to deliver another year of progress, value creation and returns for our shareholders.”
