Punch: profits down 12% at leased pubs
Profit from Punch's leased and tenanted pubs plummeted 12% on last year for the 20 weeks to 10 January.
Britain's largest pubco said trading "remained extremely challenging" and stressed that it continued to support its licensees with increased discounts and rent concessions.
"In this difficult economic environment, we continue to believe it is important to support our licensees and we have increased our level of support, in the form of rent concessions and increased product discounts, from £0.4 million per month this time last year to £1.6 million per month this year," it said in a statement.
"It is still too early to assess the positive effect of these measures on the health of our licensees which will also, to a lesser extent, have benefited from improved Christmas trading.
"The trend in beer sales has continued broadly in line with the exit rate reported for the last financial year, with double digit volume declines being experienced during the first 20 weeks of the current financial year."
Capital expenditure in the leased estate will see a reduction of around £20m to £30m in the coming year as licensees take a more cautious approach to investment.
Managed pubs
Like-for-like sales at Spirit pubs were down 2.5% for the first 20 weeks but figures were improved by a good Christmas — up 1.9% on last year.
Operating margins continue to be squeezed with rises in food and energy costs estimated at £13m for the year ahead. As a result, operating margin is running five percentage points down on last year.
Capital expenditure for the year ahead at Spirit pubs is estimated to be around £55m — down £15m on previous estimates. The majority of the 44 sites returned to Punch from Orchid in December will resume trading in January.
Debt
Punch said that over the last 18 months it had focused on reducing the overall level of its debt. It has re-purchased £180m worth of debt at a cash cost of £145m. It said it believed it would meet the restricted payment condition for its securitisations within Punch A and Punch B this year.
Caution
"Given the very challenging trading environment and the deteriorating economic outlook for the UK consumer, we continue to focus on taking prudent steps in utilising cash to reduce our level of debt, whilst seeking to maintain investment in our high-quality pub estate at an appropriate level," said Punch chief executive Giles Thorley.
"Whilst we remain confident of the longer term prospects for the company and the sector, difficult trading conditions are likely to persist for the foreseeable future and we remain extremely cautious over the near-term."
Punch is expected to face some tough questioning from investors at its AGM later today.
