Eight per cent income slump for Enterprise Inns pubs
Enterprise Inns has reported an eight per cent fall in pub net income across its estate in the 16 weeks to January 17, 2009, with rental revenue down seven per cent over the same period.
Blaming the continuing pressure on consumers for the decline, the UK's second largest pubco said it expected the coming months to be "very challenging", but claimed its balance sheet and cash flows remained "robust".
The group said it had no need for refinancing before its existing loan facility of £1bn becomes due for renewal in May 2011.
Beer sales during the 16 weeks were six per cent down on the same period last year, with margins down eight per cent after elements such as the duty increase were accounted for.
Enterprise said it had had "considerable success" in cutting the number of pubs facing temporary closure, but that rent concessions had hit the overall level of rental income.
It said it was spending £1.4m a month on various licensee support schemes.
The group said acquisitions had been put on hold following the purchase of four pubs in the period for £3m.
Proceeds from disposals of 146 pubs were expected to total around £41m, it added, "broadly in line with book value".
Capital expenditure on the group's pub estate amounted to £11m in the first quarter, with £45m expected to be spent during the year.
The City bounced Enterprise's shares this morning, upo nearly nine per cent at 34.5p, although views were mixed, with analysts pointing out no mention had been made of the dividend and that licensee support was up £100,000 a month on the last period.
Alex Paterson of Liberum Capital said the tail end of Enterprise's estate would suffer from not being able to offer a decent enough food offer and seeing hard-to-get drinks margins under further pressure from supermarkets.
"With many pubs over-rented, rent concessions and special discount schemes are running at £1.4m per month and our suspicion is that as the recession deepens, this will only get worse," he said.
