Profit and sales up at Fuller's

London brewer and pub operator Fullers has reported an 11% rise in pre-tax profit to £16.8m for the 26 weeks to 25 September.

Revenue rose 4% to £121.5m with adjusted profit before tax up 11% to £15.7m and EBITDA up 6% to £24.1m on last year.

"I am pleased to announce an excellent set of results for the first half of our financial year in what has been another challenging period for the industry," said chairman Michael Turner.

Managed pubs​

Like-for-like sales in its managed pubs and hotels increased 3.3% for the 26 week period.

Revenue increased by 4% to £74.8m. Pre-exceptional operating profits increased by 8% to £10.3 million and EBITDA increased by 7% to £14.4m.

Food sales grew 4.2% on a like-for-like basis and now represent 29% of revenue (28% last year), excluding the 12 pubs where food is provided by Thai franchisees.

Wet sales grew by 2.3% on a like for like basis, with cask ale again outperforming lager. But the strongest growth area was accommodation with revenue up 11.4% on a like-for-like basis and now accounts for 7% of total revenue.

"As we anticipated, the football World Cup had a minimal overall effect on the business; the good weather for the first half of the summer was far more significant," said Turner.

"The 11 Central London pubs acquired during 2009 are fully integrated into our business. They have all traded well over the period and benefited from a programme of investment to ensure they meet the high standards of the Fuller's estate."

Like-for-like sales in its managed pubs and hotels grew by 3.5% for the 33 weeks to 13 November 2010.

Tenanted pubs​

Revenue increased by 1% to £13.5m, assisted by strong foreign beer sales and good early summer weather.

Operating profits rose by 2% to £5.1m, whilst EBITDA climbed 2% to £5.9m. Like-for-like profits were up 1%.

"We continue to work closely with our tenants, developing strong business plans to manage the impact of the economic downturn together.

"As part of these plans, we have chosen to cap increases to indexed rents at 3% regardless of RPI until the end of the current financial year," said Turner.

"Our programme of investment in the tenanted arm of the business remains strong with small, targeted investments made in partnership with our tenants, focusing on customer-facing areas."

It sold two pubs — the Seven Stars, Kensington, and the White Horse, South Bersted for £2.6m — during the period with a further two sales after 26 September — the Fur and Feathers, Basingstoke and the White Bear, Hounslow.

Beer​

Fuller's beer volumes dropped 2% overall to 107,100 barrels — primarily as a result of the "challenging climate" in the free-trade pub sector where Fuller's volumes declined 11%.

This on-trade decline was off-set by off-trade volume growth of 8% and export volume growth of 25%.

However, revenue from its beer brands increased 4% to £51.3m — a "good" performance in a "tough" market. Operating profits increased by 5% to £4.1m and EBITDA increased by 6% to £5.2m driven by total beer volume growth of 1%.

VAT rise​

The group's net debt has fallen by £14.1m since the year end to £93.6m. Turner said the company had "the ability to capitalise on acquisition opportunities as they arise" but would be "highly selective".

Turner added: "In January VAT will increase to 20% and we expect that, with the announced Government spending cuts, the economic climate is likely to remain challenging for some considerable time.

"Nevertheless, we expect the spending cuts to impact the South of England less than other parts of the UK and we are confident that with our strong brands and high quality, well invested estate, we are well placed for further growth."