UK pub chain reports profits increase despite smoking ban
British pub chain Greene King overcame rising costs and the smoking ban to deliver profits growth of 7% in the first six months of its financial year today.
The group, which has expanded with the acquisitions of Hardys & Hansons and Loch Fyne Restaurants, said it had been a "very successful" first half but added that it expected the remainder of the year to be more challenging.
Revenues for the 24 weeks to October 14 were up 6% at £445 (€625.2m), while pre-tax profits before exceptional items improved to £71.6m (€100.6m). Analysts described the half-year showing as strong, but shares still opened 3% lower amid concerns about trading conditions for the rest of the year.
Chief executive Rooney Anand said: "The markets in which we operate have become more challenging in the last 12 months."
He said the company continued to manage it way through cost increases, but added it faced "intense" price competition from the off-licence sector, as well as the short-term effect of the smoking ban and weaker consumer confidence.
Mr Anand added: "Nevertheless, we remain confident in the quality of our pubs, beer brands and people - and consequently in our ability to create positive value for the long-term."
Greene King said it continued to refine its pubs in response to the smoking ban, but added that it had been "cautiously encouraged" by its experience since the legislation came into effect across the UK in the summer.
Despite the ban, like-for-like sales in the half-year were up slightly at the company's managed pubs estate in England and Wales. The figure was 1.5% higher excluding 39 flood-affected sites and comparisons with the previous year's World Cup football tournament.
Total sales from the 798-strong estate lifted 8% to £268.2m (€376.8m), but margins were slightly lower after the addition of the Loch Fyne restaurants. Operating profits rose 6% to £53.2m (€74.7m).
