Greene King expects challenging winter

Suffolk brewer and operator unveils jump in profits but faces tougher winter challenge

Greene King has warned it faces a tough second half of the year as the smoke ban starts to bite in winter.

The brewer and operator also said rising cost pressures and a dip in consumer confidence would take its toll.

This comes despite a record set of first half year results for the 24 weeks to 14 October.

Overall profit before tax was up 7% to £71.6m for the 24 weeks to 14 October 2007.

Operating profit per tenanted pub was up 8% to £56,200 while operating profit at its Belhaven pub estate in Scotland was up 16% - one year on from the smoking ban.

Like-for-like sales at its managed pubs were slightly up on last year despite the smoking ban, lack of a major football tournament and the effects of flooding which hit 39 pubs.

Food sales were up 16% and coffee sales up 45% after installing premium coffee offers in 397 outlets.

Revenue at the Brewing Company rose by 1% and profit by 4% chiefly driven by its sponsorship of England Rugby.

Greene King recently acquired New Century Inns estate of 49 pubs for £32.6m.

"We have had a very successful first half but we expect the remainder of the year to be more challenging," said chief executive Rooney Anand.

"We will, however, benefit from the underlying strength of our business, recent acquisitions and our strong financial management.

"Overall, we are confident of an earnings performance in line with expectations.

"There are well-documented concerns facing the entire industry - the first winter of the English smoking ban, cost pressures and general consumer confidence.

"Nevertheless, we continue to seize opportunities to strengthen our business and broaden the appeal of our pubs.

"We have confidence in the resilience of our business model, the quality of our assets, our robust balance sheet and our long-proven strategy."

Smoking ban

Anand said that a full year's trading was required to fully gauge the impact of the smoking ban in England but based on evidence from its Belhaven estate said "growth in food sales has helped offset softer wet sales and machine income".

He added: "The ban represents an opportunity to bring new customers into the market, especially from among non-smokers, women, families and retired couples."