Leading analyst Geof Collyer has said he’s “very confident” of his full-year forecast for Enterprise Inns following its H1 results this morning, with the possibility that the company could report EPS growth for 2014.
Collyer, of Deutsche Bank, pointed out that revenues, at -1.3%, were 1.9% ahead of Deutsche Bank’s forecast, with pre-tax profit in line with forecasts and flat year-on-year.
“Net income was +1.1% on a like-for-like basis. This was the third quarter in a row of positive lfl net income growth, with Q4’13 +0.6%, Q1’14 +0.5% and Q2’14 +1.5%. Possibly of greater importance, this was the first half year of underlying and absolute EPS growth (+2.4% vs. DBE +0.8%) that Enterprise Inns has produced since H1 2006.”
“Whilst we are maintaining our forecasts – there is a tough comp in H2 vs. a soft one in H1 – the new CEO is ‘…confident that…we will achieve our target of like-for-like net income growth for the full financial year…’ With the group exiting Q2 on +1.5% and running at somewhere between +1.0% and +1.5% for the YTD (32 weeks), ETI would have to see lfl net income down by between -1.5% to -2.5% for the remaining 20 weeks not to deliver a positive result for the whole year.
“Given the exit rate and the FIFA World Cup still to come, alongside lower business failures (reduced by -16%) and lower cost of failures (we estimate by c.-7%), we are very confident of our full year forecast, with the possibility that ETI could report EPS growth for FY’14.”
He added: “EBITA growth was -4.1% on the back of a -5.5% decline in average pubs trading (vs. DBE -4.0%). However, this was after absorbing an extra £3m of head office overhead, so the underlying number was only down -1.4%. The per pub performance was comfortably better than DBE, both in terms of sales and EBITDA. Disposals of £42m were in line, with average proceeds per pub of £325k, +17% better than those achieved for H1’13.”
