Punch Taverns, the quoted pub operator, has this morning unveiled like-for-like sales at its managed house arm Spirit Group down 2.8% for the six months to 1 March, 2008.
Like-for-like profit at its leased arm was down 2% and pre-tax profit for the group was up 1% to £133m - from a combined pub estate that was some 9% smaller than the year before following various asset sales and disposals.
Giles Thorley, chief executive, told M&C Report: "I think we all know it is challenging but we are in a good position to endure the current market."
In Spirit Group, which comprises 868 pubs, average ebitda per pub was up 4% to £63m. During the period £38m was spent on capital investment. Since acquiring Spirit in January 2006, it had spent £160m on the business.
Food sales were the largest product category, representing 39% of the mix. This rose to 59% at its Chef & Brewer brand and 53% at Two For One. Average sales per pub per week at Spirit were up from £13,000 to £16,000.
Thorley said that the group had kept close control of costs and expected to be cost neutral this year despite rising commodity and fuel prices.
Rent concessions in place at its leased arm, which comprises 7,581 pubs, had risen from just over 1% to 2%.
He said: "The environment is more challenging, and in any market there are winners and losers, but the pub is still an attractive business proposition. We completed 70 lettings last month alone."
Punch said that despite the tougher times, sustainability measures were encouraging – in the six months 235 rent reviews were completed with an average of uplift of 6%. It also oversaw 156 lease renewals with an average uplift of 14% and overdue debt levels were in line with last year.
Punch witnessed 270 assignments during the period, with an average premium of £72,000 paid.
During the 28 weeks overall ebitda rose 4% to £259m in the leased estate, with average ebitda per pub up 10%. Average licensee profitability was up 11% to £40,000.
It completed 750 capital developments in partnership with licensees, with Punch investing about £46m.
It said the level of support provided to licensees was industry-leading, with 4,300 training days during the period.
Matthew Clark, the drinks distributor in which Punch owns 50%, contributed £2.1m of post-tax earnings to the group.
Debt reduced by £56m to just below £4.9bn. All of its debt was now fixed, at an average of 6.6% and with an average life of 19 years. Interest cover was now above 2.0x.
Of current trading, the group said the third quarter was in line. It said: "Whilst in the short-term, trading conditions into the second half of the financial year are likely to remain challenging given the impact of duty increases and continued pressure on disposable incomes, trading comparatives are expected to improve as we move into the summer months and as we pass the first anniversary of the smoking bans in England and Wales.
"Whilst the sector is continuing to experience a degree of uncertainty, we remain confident about the medium-term future prospects for our business.
The company will next update the market on 7 July.
