Fuller's reports 4% half-year pre-tax profit increase

Fuller’s, the London-based brewer and pub operator, saw revenues grow 8% to £137.9m and adjusted pre-tax profit increase 4% to £17.1m in the 26 weeks to 29 September, a period it described as an “extraordinary six months”, and revealed that it has spent £11.4m on four acquisitions this autumn.

EBITDA rose 8% to £26.9m and adjusted earnings per share increased 8% to 23.14p. The firm’s interim dividend increased 6% to 5.35p.

Sales in its managed pubs and hotels increased 1.6% on a like-for-like basis, with profits up 5%. Fuller’s said the performance of the 13 managed pubs bought last year has been “particularly encouraging” in recent months following investments.

In September Fuller’s added two freehold sites to its tenanted arm - the Windmill in London’s Waterloo and the Grand Central in Brighton - for £3.9m. On 1 November it bought two freehold pubs for its managed estate - the Huntsman and the Crystal Palace, both Grade II-listed sites in Bath - for £7.5m.

In its tenanted estate, like-for-like profits increased 1% and operating profits increased 19%, with growth driven by the 17 pubs it acquired last year. Revenues rose 15% and operating margin was up 1.5% due to it’s strategy of adding pubs at the top end.

In Fuller’s Beer Company, total beer volumes increased 1%, EBITDA was level with last year although operating profit declined 7% due to increased depreciation from its investment in additional conditioning tanks, put in place to increase capacity for export and off-trade.

Net debt to EBITDA was 2.7 times (2011: 1.9 times).

Michael Turner, chairman of Fuller’s, said: “Despite what has been an extraordinary six months, I am pleased to announce a strong set of results, driven by a very encouraging performance from the exciting acquisitions we have made over the past year and a half.

“Managed Pubs and Hotels, our largest division, has delivered a robust performance against the backdrop of a unique combination of events in London and the wettest summer in 100 years. The 13 Managed pubs purchased last year have seen considerable focus and investment in this period and their performance in recent months has been particularly encouraging. There is gathering momentum as these pubs climb towards their full trading potential.

“Whilst the economic outlook remains uncertain, we are confident that the business is well placed for the future, with a healthy balance sheet and a successful long term strategy. The 2012 London Olympic Games showcased our vibrant capital city and generated fantastic goodwill and publicity around the world. We have no doubt that Fuller’s historic London heritage and iconic brands will receive an enduring boost for many years to come from this unique summer.”

On current trading, Turner said: “Over the 33 weeks to 17 November 2012 like for like sales in our Managed Pubs and Hotels increased by 2.1%, Tenanted Inns like for like profits were level and our total beer volumes were level. Trading in the last seven weeks should be viewed in the context of the ‘Indian summer’ of October last year. We are looking forward to the months ahead and in particular the important Christmas trading period.

“Total capital expenditure for the year is expected to be around £32m, with any further pub acquisitions beyond the four completed to date being in addition to this. We have a number of major investments underway or planned in the second half of the year, although the closures required will be more comparable to prior periods than the first half. We will continue to pursue our selective acquisitions strategy as attractive opportunities arise.

Fuller’s pointed out that it paid taxes and other Government levies of £114m over the 12 months to September, a “staggering” 36% of group revenues including VAT.