Greene King, the brewer and pub operator, has revealed a significant drop in year-on-year figures at its leased pub arm, but unveiled better trading in recent weeks at its managed house business.
The group, which operates a leased estate of about 1,450 pubs, said like-for-like profit had fallen 5.3% in the 38 weeks to 25 January. In line with other leased companies in the pub sector, it said the fall stemmed from lower beer volumes and increased financial support to lessees.
However, the group, led by chief executive Rooney Anand, reported better trading at its 770-strong managed house business, which operates the Hungry Horse and Loch Fyne brands. Like-for-like sales in the past eight weeks had risen 2.4%. The performance helped reduce an overall 38-week like-for-like sales decline to 1.1%.
On its sales and promotions policy at its managed houses, Greene King said it was currently walking a line between discounting to offer value to its customers, and protecting margins in what was a period of rising costs.
Its brewing division, which makes Speckled Hen and Greene King IPA, saw beer volumes drop 1.5% in the 38 weeks.
At Belhaven, the separately-run Scottish business, like-for-like sales at managed pubs were up 2.4%, and it said beer volumes remained ahead of the Scottish market.
It said there were clear signs that the economic slowdown was beginning to have an impact in Scotland.
It said it also had extended help to Scottish pub tenants – and in line with lessees south of the border – the “vital signs” of licensee health remained stable.
The company had also disposed of 90 pubs and excess land for a total of £35m in the period.
It said it continued to pay down net debt and had no refinancing requirements before 2012. It would invest £25m on investment projects at pubs in the second half as it sought to “carefully balance accretive investment in our pubs, reducing our debt levels and providing returns for our shareholders”.
In a statement, Anand said that the company was “well placed to cope with a prolonged consumer downturn”.
He said: “We remain cautious as to the trading prospects for 2009, and we anticipate that the outlook for the rest of the year will remain very challenging.”
