W&DB reports good trading but warns on costs
Wolverhampton & Dudley Breweries has reported good trading but warned it will have to find another £5million next year to cover increased energy and minimum wage costs.
The company, which runs the Pathfinder and Union pub companies, also said its plans for the forthcoming smoking ban were 'advanced'.
We expect that higher energy prices and a 6% increase in the minimum wage level will impact our overall cost base by around £5 million next year W&DB statement.
In a statement released this morning it said: "Detailed plans are in place in preparation for the smoking ban in England and Wales, which is due to come into force during the summer of 2007 or earlier.
"Our investment plans, both in managed and tenanted pubs, are well advanced.
Over 85% of our pubs have gardens, patios or some form of outside trading area, allowing us to target opportunities and reduce risk."
Good tradingThe statement said both pathfinder and Union pubs had traded well in the 51 weeks to September 23.
In Pathfinder, which comprises 457 managed pubs, total like-for-like sales during June and July were up 6.7%, benefiting from good weather and the World Cup.
The staement said: "Trading since the end of July has continued to be ahead of last year.
"Total like-for like sales in the second half of this financial year were 3.7% ahead of last year and 2.4% ahead in the 51 week period.
"We have made excellent progress with our new-build pubs in Pathfinder Pubs, and have a good pipeline of sites for development in 2007.
"The Union Pub Company will comprise 1,898 tenanted pubs following the acquisition of Celtic Inns in March 2006 and on completion of the transfer of 93 pubs from Pathfinder Pubs during the second half of the year.
Average profit per pub is estimated to have increased by approximately 5% in the 51-week period."
The W&DB board was also particularly pleased with its sponsorship of the England Cricket Board, which it said: "reflects WDB Brands' increasing focus on premium ale - through Marston's Pedigree, Old Empire and Jennings Cumberland Ale."
Adding: "We have increased our share of the premium ale market, and performed in line with the standard ale market."
Costs warningWhile the company reports its outlook is good it also warned over increasing costs -particularly rising energy costs and the minimum wage increase.
It said: "We expect that higher energy prices and a 6% increase in the minimum wage level will impact our overall cost base by around £5 million next year.
"We remain cautious on the outlook for consumer spending given recent increases in domestic energy costs, historically high levels of consumer debt, and some upward pressure on interest rates.
"We continue to seek to mitigate the impact of cost pressures through efficiency and cost reduction initiatives.
Our integrated business model provides us with wider investment opportunities and increased operational flexibility.
"The Board remains confident that our strong balance sheet, conservative financing and strong cash flow will allow us to continue to target further investments meeting our return on capital criteria."
Preliminary results for the 52 weeks to 30 September are due to be reported on 1 December 2006.
