GK's profits rise 14% in
wake of Laurel deal
by John Harrington
Greene King is reaping the rewards of its acquisition of Laurel's neighbourhood pubs, after posting record results for the year to 1 May 2005.
Pre-tax profits for the Bury St Edmunds brewer and pub operator were up 14% to £94m. Turnover increased by 33% to £732.6m, while trading profits increased by 39% to £155.7m.
The results follow Greene King's purchase of 432 pubs from Laurel for £654m last August. The Laurel pubs were integrated into Greene King's estate ahead of schedule in February 2005.
Greene King's managed division, the Pub Company, reported an increase in turnover of 50% to £495.9m, while trading profit was up 65% to £93.8m.
As a result of the Laurel purchase, the size of the managed estate increased from 551 to 801 sites.
Meanwhile, turnover at Greene King's tenanted and leased arm, Pub Partners, increased by 8.8% to £125.1m. Trading profit was up 13%.
The Pub Partners estate increased from 1,153 to 1,244 pubs during the period. Of this, 84 pubs were transferred from the Pub Company and 34 were former Laurel outlets, while 27 pubs were sold.
Greene King chief executive Rooney Anand said both the managed and tenanted arms benefited from the ability to transfer pubs between the two divisions. A total of 117 Pub Company pubs were transferred to Pub Partners because they were deemed too small to fit the managed model.
The brewing side, the one division not directly affected by the Laurel acquisition, also recorded growth.
Trading profits were up 10.6% to £17.8m, and turnover in the division increased from £106.1m to £111.6m.
Volume sales were up 3%. Most notably, Greene King IPA overtook Tetley's Bitter to become Britain's top-selling cask beer brand.
IPA volume sales were up 4%, Old Speckled Hen 6% and Abbot Ale 4%.
Anand attributed the growth to advertising and marketing. He said the strategy of avoiding TV advertising in favour of press ads had enabled the brands to get wider coverage for a lower cost.
'We remain the largest advertiser of cask ale in the United Kingdom, Anand pointed out.
He added: 'The acquisition of Laurel, its successful integration and an improved funding structure have made Greene King a stronger business.
