8th Sep 2009 07:00
PRESS RELEASE
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08 September 2009 |
GREENE KING plc
INTERIM MANAGEMENT STATEMENT
At its AGM today, Greene King will make the following Interim Management Statement for the 17 weeks to 30 August 2009.
The positive trends seen across our businesses in the early weeks of the year have continued.
After 17 weeks, our retail businesses continue to deliver strong sales growth. Greene King Retail LFL sales are currently +4.6%, driven by the ongoing strength of our food operations where LFL sales growth is +8.1%. Both Destination and Local Pubs are in healthy growth, with our food-led pubs performing best. Belhaven Retail LFL sales are +10.9%. For both retail businesses, we expect LFL growth to moderate due to tougher year-on-year comparatives in the second half of our financial year.
This strong sales growth across our Retail business has not been at the expense of operating margins. After 16 weeks, Greene King Retail margins are less than 100bps lower than last year, in spite of the cost pressures still being experienced in the first half of the financial year.
Profit trends within Pub Partners, our predominantly tenanted business, have continued through the summer in line with those seen at the end of the last financial year. An improved volume performance and the positive impact of non-core disposals have been partially offset by higher licensee support around our 'Crunch Time' initiative. After 16 weeks, average EBITDA per pub is -7.2%. Interest in our tenancies from prospective new licensees has picked up and we have reduced the number of closed pubs from 30 at the year-end to 15. Once again, the tie is being investigated by the OFT and we are fully participating in this investigation. At the same time, we continue to investigate ways to further improve licensee profitability via our industry-leading Code of Practice.
Our brewing business continues to perform strongly and to take significant market share. In a UK beer market down 6.0% in the three months to July, according to the BBPA, Brewing Company own-brewed volumes are +12.0% after 17 weeks and Belhaven Best volumes are +14.8%. In Brewing Company, the growth has been driven by strong performances across its core brands in both the on-trade and the off-trade, particularly the UK's leading premium ale brand, Old Speckled Hen.
Our balance sheet position remains robust. We continue to generate healthy cashflow to further reduce our net debt, invest in our estate and pay dividends to shareholders. Our non-core disposal strategy is supplementing organic cashflow generation with 37 disposals in the year so far. These have generated £9.6m proceeds at around book value.
We successfully concluded our £207m rights issue earlier in the year and have so far utilised £45.0m of the proceeds via targeted acquisitions (£31.6m) and debt repurchase (£13.4m). The eleven pubs acquired from Punch Taverns are trading in line with our expectations. We remain confident we can deliver attractive returns to shareholders on the remaining proceeds of the rights issue, through continuing to pursue our highly selective strategy on both acquisition opportunities and debt repurchase.
Despite the encouraging start to the year, we remain cautious on the outlook for the industry and the economy. The consumer recovery is fragile and there are numerous risks to current levels of consumer spending, particularly for the second half of our financial year, including rising unemployment and taxes, slowing wage growth and increasing debt repayments. However, our businesses are undoubtedly stronger now than they were before the consumer downturn and our people remain highly motivated to deliver outstanding performance. We are therefore in a strong position to continue outperforming the market across the UK pub and beer sectors.
For further information:
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Greene King plc |
Rooney Anand, Chief Executive Ian Bull, Group Finance Director |
Tel: 01284 763222 |
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Financial Dynamics |
Ben Foster |
Tel: 0207 831 3113 |
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