15th Nov 2019 09:37
(Alliance News) - Fuller, Smith & Turner PLC said Friday it expects annual profit to be broadly unchanged on the year prior after costs associated with the separation of its recently sold brewing business came in "materially" higher than expected.
Shares in Fuller's were 5.7% lower at 990.24 pence in London on Friday.
In January, pub operator Fuller's agreed to sell its historic brewing operations to Japanese brewer Asahi Group Holdings Ltd for GBP250 million.
However, a transitional service agreement related to the sale remains in place until May 2020 and the costs associated with this deal have been "materially higher than expected". Consequently, additional resources have been required to help push the business through the complicated separation process of its foundational brewing unit.
Fuller's expects the higher overhead levels to remain in place until the services agreement ends in May. Following this, the now pure-play pubs and hotels operator will be able to transition its costs structure to this new focused business.
As a result of these higher costs, however, adjusted pretax profit for the year ending March 28 is expected to be "broadly in line" with the GBP31 million reported the year prior.
Despite this, Fuller's emphasised it continued to trade "well" with total sales from its managed estate up 5.2% for the 32 weeks to last Saturday. On a like-for-like basis, sales were 2.3% higher on the year prior.
"This is a transitional year for the company following the sale of the brewing business and subsequent separation of a highly integrated business," Chief Executive Officer Simon Emeny said. "There have been many moving parts to navigate and we have incurred some greater than anticipated costs as a result which have had a short term impact on our financial performance. Whilst we are taking the action to address these, the impact of this will not be felt in the current financial year.
"Trading is good in light of exceptionally strong comparatives last year and the continued challenge of cost inflation facing our sector," Emeny added. "Our strategy remains on track and we will continue to execute our growth ambitions and maximise the opportunities open to us as a focused pubs and hotel business."
By Ahren Lester; [email protected]
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