LONDON (Alliance News) - Greene King PLC Wednesday reported a drop in profit in its recently-ended financial year as it booked costs related to pub disposals and lower like-for-like sales growth, but it said it is confident it will achieve long-term success through its recent acquisition of Spirit Pub Co PLC.
The pub company reported a drop in pretax profit before exceptional items in the year ended May 3 to GBP168.5 million from GBP173.1 million the year before, but the result was slightly ahead of its GBP166.5 million consensus estimate.
Statutory pretax profit grew to GBP118.2 million from GBP105.2 million, and revenue grew slightly to GBP1.32 billion from GBP1.30 billion.
Greene King said that profit was hit by lower like-for-like sales growth and the disposal of 275 pubs to Hawthorn Leisure, but revenue continued to grow driven by a 5.9% increase in the Retail business, which accounts for 76% of group revenue, to GBP1.0 billion from GBP963.0 million.
Its Pub Partners business, however, suffered a 16.9% decline to GBP121.9 million from GBP149.6 million following the sale to Hawthorn Leisure, while Brewing & Brands revenue grew 3.9% to GBP192.7 million from GBP189.0 million.
Greene King said it booked GBP50.3 million in exceptional costs, including GBP15.8 million for legal and professional fees related to its acquisition of Spirit and a GBP27.4 million impairment loss in respect of its licensed estate.
Greene King added that trading in the first eight weeks of the new financial year was "steady" with Retail like-for-like sales up 0.6%, Pub Partners like-for-like income up 1.2%, and Brewing & Brands own-brewed volume down 3.7% against tough comparatives and a delay in the timing of export sales.
But analysts at Numis are cautious of what they regard to be a "weak" start to the year.
Numis analyst Douglas Jack said that Retail like-for-likes in the same period the year before increased 1.1% while Pub Partners like-for-like revenue grew 3.5%.
Greene King said it will pay a dividend of 29.75 pence for the full year, up 4.8% from the 28.4p it paid the year before.
"We now enter another exciting new phase in the company's history, with the acquisition of Spirit. We warmly welcome Spirit's employees and its shareholders to Greene King. The acquisition will further strengthen our platform to deliver sustainable, long-term success for the benefit of our customers, our employees and our shareholders," Greene King Chief Executive Rooney Anand said in a statement.
Greene King completed the acquisition of Spirit for GBP774 million last week after offering to sell 16 pubs in order to address the UK Competition and Markets Authority's concerns over the takeover. It expects to make synergies of more than GBP30 million from the merger.
Shares in Greene King were trading down1.0% at 852.50 pence Wednesday afternoon.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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