Punch Taverns PLC Share News (PUB)

(ShareCast News) - Punch Taverns posted a drop in first-half pre-tax profit on Wednesday but shares in the pub group rallied as investors welcomed signs of progress on the strategy set out back in November.In the 28 weeks to 5 March, pre-tax profit tumbled to £54.7 from £348.5m, on revenue of £212.9m down from £221.7m.On an underlying basis, profit fell to £27.3m from £30.4m, while earnings before interest, tax, depreciation and amortisation slipped to £94m from £105m in March 2015. Punch attributed the decline to the impact of £288m of strategic disposals completed over the last 18 months.Average profit per pub across the entire estate was up 3, benefiting from the disposal of non-core pubs, with the core pub estate delivering like-for-like net income growth of 1.6%, having benefited from the transfer of 240 lower profit pubs to the Mercury division.Chief executive officer Duncan Garrood said: "We are already making good progress delivering on the strategy we set out in November 2015. We have launched new operating models, renewed our focus on customer service and delivered improved support to our publicans. "The roll-out of our new Retail contract is progressing well with underlying profit and sales post conversion being ahead of our initial expectations."Garrood said the combination of the company's growing cash balances, strong cash flow and limited scheduled amortisation over the next five years puts it in a stronger financial position going forward.Numis, which rates the stock at 'buy', said underlying pre-tax profit was ahead of its estimate of £25.6m, adding that investors can take encouragement from tangible progress in a number of key areas."This includes continued underlying growth in the core estate, improved balance sheet strength and confirmation, following the release of the Government's final Market Rent Only (MRO) option proposals that Punch's exposure is limited."Analyst Wyn Ellis added: "Punch is becoming a far more attractive equity story and the new strategy, announced in November 2015, is beginning to bear fruit."At 1020 BST, Punch shares were up 4.1% to 101p.