Punch reports managed pub sales boost

Punch expects profits to be "marginally ahead" of its expectations for the year, thanks to a fourth quarter sales rise at its managed pubs.

At its managed division, Punch Pub Company, like-for-like sales for the 52 week period were 2% below last year with an improvement in second half sales, particularly in the final quarter with like-for-like sales up 2.6%.

Operating margins have continued to improve and it has invested in 200 managed pubs during the financial year.

At its tenanted division, Punch said its Pathway to Partnership​ programme, which aims to establish Punch as the most trusted pubco in the country, is delivering operational improvements.

"The estate has been strengthened through the percentage of pubs on substantive agreements being increased to 86%, failure rates being halved and financial support to our partners being stabilised at just under £2m per month," it said.

However, Punch said its like-for-like profit decline for the 52 weeks to 21 August, is expected to be "broadly in line" with the rate reported for the half year — down 11%.

Punch's strategy of disposing of non-core pubs has raised approximately £300m at an average multiple of 16 times Earnings Before Interest Tax Depreciation and Amoritisation.

As a result, gross debt has been reduced by 17% £684m. Net debt at the end of year is £3.1bn.

Punch currently has £183m of free cash and £114m of bonds held at Group level, which will be used to protect its debt structure against default.

The pubco warned that tough times still lay ahead. "We expect the trading outlook in the near term to continue to be uncertain, particularly given the potential impact of the June budget on consumer spending into next year," it said.

"Against this backdrop, we believe it is sensible to plan cautiously and we have prepared our financial plans accordingly.

"However, we are encouraged by our current trading momentum and are confident that the business change programmes and continued management actions in both sides of our estate have strengthened the business and positioned it to deliver solid longer-term operational performance."