Pubco share prices plummet

Pubco share prices plummeted yesterday in the wake of a 9.7% decline in beer volumes for November compared to last year.

Shares in Punch Taverns fell 45p to 697p representing a 50% fall in six months while Mitchells & Butlers share prices fell 9p to 407.5p - a 53% drop in six months.

Others that suffered included JD Wetherspoon - down 5.5p to 358p (36% drop in six months) - and Marston's down 10.75p to 311p (24% fall).

Mark Brumby, of Blue Oar Securities, reported that the beer volumes drop in October was 7.7%, whilst September fell by 8.2%.

In August - where the weather normalized after three very poor months - volume was down "only"​ 2.5%.

Beer volumes have only increased once in the last two years - April 06.

Late Christmas​

An anonymous survey of 40 operators by Blue Oar Securities revealed that Christmas trade started late and finished early.

Comments included;

•"Thank God we've got beds, trading was mixed"

•"Our run in to Christmas was poor...last week was dire"

•"Machines are down 10% or more"

•"Really poor...it came late and went quickly"

•"Christmas added about four days worth of beer to December whereas it normally adds nearer to seven"

•"January looks scary"

Brumby said: "The current year will be difficult - house prices influence behaviour as does the pricing of the off-trade. The feel bad factor is a real issue and England are out of Euro 2008."​

Business Opinion with The PMA Team​"Pub sector shares have suffered what one analyst has called a savage de-rating in the second half of 2007.

"The average fall in sector share prices has been around 36% during the calendar year.

"The key date was 9 August when the credit crunch began. For the sector, generalised fears over consumer confidence have been exacerbated by concerns about how much damage will be done by the smoke ban.

"Part of the concern is justified. On Wednesday, the Morning Advertiser reported that beer volumes had dropped by 7% in the 442-strong Globe tenanted business.

Negative sentiment has chosen to ignore the fundamentals - earnings-per-share estimates have been little changed - in chopping at sector value​The PMA TeamMA deputy editor

"The estate is made up of mostly former managed pubs and therefore normally expected to withstand the ravages of a smoke ban better than the average tenanted boozer.

"If Globe performed this badly, the suspicion must be that others will have fared worse.

"The steep falls of the end of 2007 have continued into 2008 as more evidence of volume declines has surfaced. Beer volumes were down by a shocking 9.7% in November.

"January could be every bit as bad or worse, especially if really cold weather takes hold.

"On the upside, it must be remembered that 2006 saw giddy and quite unjustified rises in sector share prices - the average was just under 50%.

"Even Punch boss Giles Thorley was conceding that investor enthusiasm over the potential of conversion to Real Estate Investment Trusts was adding around £1.50 of froth to his company's share price.

"If 2006 gains were overdone, it's likely to be the case that the current losses are also excessive.

"Negative sentiment has chosen to ignore the fundamentals - earnings-per-share estimates have been little changed - in chopping at sector value."