Pub acquisitions fuel Fuller's profit growth

Fuller's, the London-based brewer and pub operator, has this morning unveiled a 17% rise in pre-tax profits to £22.8m, partly on the back of pub acquisitions.

Its managed pub arm produced like-for-like sales growth of 2.7%. Operating profits in the division, which comprises 163 sites, spiked 25% on the back of the eight newly-acquired London pubs, which were bought from Punch Taverns.

Unveiling results for the 52 weeks to 27 March 2010, the company said its managed houses had performed well in the first 10 weeks of the new financial year, with like-for-like sales pushing ahead to 3.5%.

Fuller's said it managed pubs saw operating profits rise 25% to £15.8m with first-time contributions of new pubs — in total the division had added 11 pubs since February 2009 — augmented by lower utility costs.

Food sales, which rose 17%, now account for 28% of managed house sales.

Accommodation revenue fell 1%, now representing 6% of total revenue. The group has 487 bedrooms across all properties in the managed estate.

Seven major refurbishments were undertaken during the period and one site, the Brambletye Hotel, Forest Row, was sold.

Tenanted pubs​

At its tenanted arm, which comprised 203 tenanted or leased pubs, revenues were marginally higher at £26.1m, reflecting beer sales in growth but lower rental income, as the company reduced rents in line with inflation.

Operating profits were 3% lower at £9.9m with rent and increased depreciation charges key factors. Like-for-like profits were key factors.

Fuller's said it believed its tenanted arm had "performed exceptionally well in what has clearly been a difficult environment for the industry and our tenants".

During the period it acquired one pub and sold one, and expects to sell a further 11 pubs because the sites no longer matched the companies "criteria" for ownership.

Brewing​

The group's beer arm, which makes London Pride, saw operating profits rise 7% to £8.9m and sales rise 7% to £97.9m. Its own beer volumes rose 2%. In the on trade volumes were up 2% against a market down 5%. In the off-trade volumes were up 4% in a market that grew 1%. Its export business grew 13%.

In the first 10 weeks of the new year Fuller's said its own beer volumes were flat with weakness in the UK on-trade market offset by growth elsewhere — notably exports.

Overall, group revenues were up 8% to £227.7m.

Adjusted earnings per share were up 17% to 34.19p.

The group said it planned to invest a further £12m in total in the business this year.

On the outlook for the forthcoming year and beyond, Michael Turner, executive chairman, said: "With the UK national debt so large and measures to tackle this through tax rises and public spending cuts now being implemented by the new government we continue to be very cautious about the outlook for the UK economy.

"We may technically have emerged from recession and the economy may no longer be contracting, however, with the prospect of personal taxation in our target market rising further and disposable incomes reducing there may be less leisure spend available in real terms.

"Despite these challenges we consider that we continue to be well placed with a strong balance sheet, excellent brands, and well invested pubs that serve outstanding cask ale and delicious food."

The next trading update will be on 23 July, 2010.