Punch Taverns, the embattled pub operator, has again expressed caution over trading despite revealing it has reduced its net debts by £1bn.
In a pre-close trading statement for the 52 weeks to 22 August, the group said that like-for-like ebitda was still running at around –11% for its tenanted arm, but it thought it would meet its expectations for the full year, despite not anticipating an improvement in demand.
It pointed to some fourth quarter stabilisation as proof that actions like a leased and tenanted turnaround division and improved managed pub offering were having an impact on performance.
Punch said that it would continue to try increase cash flows and repay debt by taking actions to reduce costs and the disposal of non-core assets.
As previously reported, the company has raised in excess of £400m via pub disposals, which were realised at an average multiple of not less than 10 times ebitda.
Since the start of the year Punch has repaid £708m of debt, £698m ahead of schedule, at the cost of approximately £473m.
It also undertook a £350m share placing in July, which will be used to repay convertible bonds due in 2010 and other debt.
As a result, this meant the group has reduced its net debt by £1bn or approximately 23% since the start of the year.
It added that ebitda was down by £6m (£29m annualised) following its disposal programme of non-core assets and that it would be adding a further 450 pubs to its turnaround division, which receives closer operational support.
Licensee support continued at £1.6m a month.
Like-for-like sales at its managed arm for the 52 weeks had fallen by 1.4% and Punch said this had been split by a 2.3% decline in the first half and a reduction of 0.6% in the second.
But Punch warned that margins were continuing to be affected by above inflation regulatory, food and energy costs.
Operating margin for the 52 weeks was down by 350 basis points – which Punch said was split by a 400 basis point decline in the first half and a 250 drop in the second.
In a statement Punch said: “While we remain confident of the longer term prospects for the group our expectations for the full year remain unchanged, we remain cautious over the near-term.”
