Wolverhampton & Dudley Breweries offered a mixed picture in its interim results to 29 March this morning, with key indicators up but absolute figures down.
Pre-tax profits for the 26-week period were down 3.8% to £30.1m, still ahead of analysts' estimates of between £28.7m and £29.5m, as turnover dropped 4.3% to £239.2m.
However, the group operating margin rose from 19.3% to 20.0% while the return on capital increased from 10.9% to 11.1%, and the return on capital at the brewing division, W&DB Brands, rose from 16.3% to 20.1%.
Wolves said total like-for-like sales at its Pathfinder Pubs managed estate were up 3.1% after the transfer of 104 poorer-performing managed houses to its tenanted division, with the trend accelerating to 3.2% for the 33 weeks to 17 May. However, overall sales were down £13.6m, or 10.1%, to £121.2m, with operating profit down £2m, or 7.9%, to £23.4m.
In the tenanted side, the Union Pub Company, like-for-like sales rose 2.0%, and 2.1% in the 33 weeks to 17 May. The extra pubs transferred from Pathfinder helped boost turnover £8m to £58m with operating profit up £2.6m to £22.8m
During the half-year Wolves bought back nearly 735,000 shares at a cost of £4m, which helped push earnings per share before amortisation and exceptionals up by 15% to 28.4p.
Wolves' chairman, David Thompson, said the Pathfinder Pubs estate was now made up of 479 managed pubs, including 28 Pitcher and Piano bars, with the average turnover per week now £10,000. Overall, like-for-like turnover from food increased by 6.4% and now represents 27% of total turnover from managed pubs, up from 25% in 2002. Operating margins increased from 18.8% to 19.3% and return on capital increased from 11.2% to 11.4%. Wolves has put in a £6m epos system across the whole estate
The 73 Bostin' Local pubs have seen average turnover double on conversion, with an average cash return on incremental capital "comfortably above our minimum target of 20%" The 16 'Service That Suits Me' pubs offered similar returns, Thomas said. Wolves aims to develop around 35 new Bostin Locals a year from its existing estate over the next few years, and around 10 Service that Suits Me pubs a year. The company also plans to build new Bostin' Local and Service That Suits Me pubs on greenfield sites, with six sites in Cambridgeshire, County Durham, Leicestershire, Northamptonshire, Oxfordshire, and South Wales under negotiation.
The tenanted pub division's 1,139 pubs saw operating margins drop 1.1 percentage points to 39.3%, reflecting the lower margins of the managed houses transferred in the period until they were leased or tenanted, and increased revenue repairs relating to the 21-year lease programme. However, the underlying operating margin, excluding managed houses transferred during the period, increased by 2.0% to 42.4%, while return on capital rose from 12.9% to 13.1%.
Turnover at the brewing division dropped 8% to £60m, which Wolves blamed on the "significant restructuring" of the business, which included the disposal of some of its brewing assets, resulting in a 17.7% drop in divisional assets to £89.7m. However, operating profit rose 1% to £9m and operating margin was up 1.3 percentage points to 15.0% while return on capital rose from 16.3% to 20.1%. Volumes of Marston's Pedigree were up 1.5% despite a 3% drop in the beer market.
Total capital expenditure for the period amounted to £18.9m similar to the first half of last year, with £11.8m invested in Pathfinder Pubs, £4.9m in the Union Pub Company, £1.4 million in W&DB Brands and £800,000 in central systems. Of the total £8.7m was maintenance capital, the rest investment capital on major refurbishments and new sites. Wolves said it expected its full year investment to be around £40m, down from £46.3m last year.
Pre-tax profits for the 26-week period were down 3.8% to £30.1m, still ahead of analysts' estimates of between £28.7m and £29.5m, as turnover dropped 4.3% to £239.2m.
However, the group operating margin rose from 19.3% to 20.0% while the return on capital increased from 10.9% to 11.1%, and the return on capital at the brewing division, W&DB Brands, rose from 16.3% to 20.1%.
Wolves said total like-for-like sales at its Pathfinder Pubs managed estate were up 3.1% after the transfer of 104 poorer-performing managed houses to its tenanted division, with the trend accelerating to 3.2% for the 33 weeks to 17 May. However, overall sales were down £13.6m, or 10.1%, to £121.2m, with operating profit down £2m, or 7.9%, to £23.4m.
In the tenanted side, the Union Pub Company, like-for-like sales rose 2.0%, and 2.1% in the 33 weeks to 17 May. The extra pubs transferred from Pathfinder helped boost turnover £8m to £58m with operating profit up £2.6m to £22.8m
During the half-year Wolves bought back nearly 735,000 shares at a cost of £4m, which helped push earnings per share before amortisation and exceptionals up by 15% to 28.4p.
Wolves' chairman, David Thompson, said the Pathfinder Pubs estate was now made up of 479 managed pubs, including 28 Pitcher and Piano bars, with the average turnover per week now £10,000. Overall, like-for-like turnover from food increased by 6.4% and now represents 27% of total turnover from managed pubs, up from 25% in 2002. Operating margins increased from 18.8% to 19.3% and return on capital increased from 11.2% to 11.4%. Wolves has put in a £6m epos system across the whole estate
The 73 Bostin' Local pubs have seen average turnover double on conversion, with an average cash return on incremental capital "comfortably above our minimum target of 20%" The 16 'Service That Suits Me' pubs offered similar returns, Thomas said. Wolves aims to develop around 35 new Bostin Locals a year from its existing estate over the next few years, and around 10 Service that Suits Me pubs a year. The company also plans to build new Bostin' Local and Service That Suits Me pubs on greenfield sites, with six sites in Cambridgeshire, County Durham, Leicestershire, Northamptonshire, Oxfordshire, and South Wales under negotiation.
The tenanted pub division's 1,139 pubs saw operating margins drop 1.1 percentage points to 39.3%, reflecting the lower margins of the managed houses transferred in the period until they were leased or tenanted, and increased revenue repairs relating to the 21-year lease programme. However, the underlying operating margin, excluding managed houses transferred during the period, increased by 2.0% to 42.4%, while return on capital rose from 12.9% to 13.1%.
Turnover at the brewing division dropped 8% to £60m, which Wolves blamed on the "significant restructuring" of the business, which included the disposal of some of its brewing assets, resulting in a 17.7% drop in divisional assets to £89.7m. However, operating profit rose 1% to £9m and operating margin was up 1.3 percentage points to 15.0% while return on capital rose from 16.3% to 20.1%. Volumes of Marston's Pedigree were up 1.5% despite a 3% drop in the beer market.
Total capital expenditure for the period amounted to £18.9m similar to the first half of last year, with £11.8m invested in Pathfinder Pubs, £4.9m in the Union Pub Company, £1.4 million in W&DB Brands and £800,000 in central systems. Of the total £8.7m was maintenance capital, the rest investment capital on major refurbishments and new sites. Wolves said it expected its full year investment to be around £40m, down from £46.3m last year.
Wolverhampton & Dudley Breweries trading overview
|
| Turnover | Operating profit | Margin | Return on capital | ||||
|
| 2003 | 2002 | 2003 | 2002 | 2003 | 2002 | 2003 | 2002 |
|
| £m | £m | £m | £m | % | % | % | % |
| Pathfinder Pubs | 121.2 | 134.8 | 23.4 | 25.4 | 19.3 | 18.8 | 11.4 | 11.2 |
| Union Pub Co. | 58.0 | 50.0 | 22.8 | 20.2 | 39.3 | 40.4 | 13.1 | 12.9 |
| W&DB Brands | 60.0 | 65.2 | 9.0 | 8.9 | 15.0 | 13.7 | 20.1 | 16.3 |
| Central costs | - | (7.3) | (6.3) | (3.1) | (2.5) | - | - |
|
| Group | 239.2 | 250.0 | 47.9 | 48.2 | 20.0 | 19.3 | 11.1 | 10.9 |
