Greene King says it profits are on track

The economic downturn appears to have passed by Greene King's managed pub operation, which today reported like-for-like sales up nearly four per cent for the 49 weeks to April 11, 2010.

While remaining cautious about the post-election environment for consumers, in a trading update issued today the Suffolk brewer said it was "confident" of meetings its earnings and profits expectations for the current financial year. City analysts expect pre-tax profits for the year in the region of £122m.

Greene King said strong food growth helped drive sales across its managed pub estate up 3.6 per cent during the period, with its Hungry Horse and Old English Inns brands performing well.

Growth appears to have slowed following the bad weather earlier this year, however. At the 35 week point the brewer had said managed pub like-for-like sales were five per cent ahead.

Despite this the group said margins in the second half were expected to be "broadly in line" with the same period last year.

Greene King's said the average earnings per tenanted and leased pubs were down 3.4 per cent. The brewer said 90 per cent of its pubs - around 1,240 - were trading on substantive agreements and that financial support for those of its licensees who were struggling was running at below £6m for the financial year.

In its Belhaven operation like-for-like sales were up 5.6 per cent, while Belhaven Best volumes were up more than 15 per cent.

Greene King's own-brewed beer volumes were up nearly four per cent, it said.

The brewer said it had spent £86m of the money it raised through last year's rights issue - less than half - and it was "confident of driving additional growth via further utilisation of the rights issue proceeds in 2010, whilst maintaining our strict financial and strategic disciplines"; in other words, buying more pubs but not over paying for them.