Fuller's reports profit rise and enters premium cider market
Meanwhile, Fuller’s also announced that it is has signed an agreement with Heathrow Airport for a prominent airside pub in the new Terminal 2 called London's Pride, to open in June 2014.
Revenue grew 7% to £271.5m and EBITDA rose 7% to £51.2m. Adjusted earnings per share increased 8% to 43.07p and it announced a final dividend of 8.35p, a rise of 10%.
In the managed arm, total sales grew 9% to £170.1m, with like for likes up 2.1%, led by accommodation up 8.2% which received a one-off benefit from the Olympic Games. Like for like drinks sales up 0.9% were most strongly impacted by the wettest summer and coldest March for a generation, Fuller’s said. Like-for-like food sales grew 3.9%. Profits in the division grew 6%.
Managed operating profit before exceptional items increased 6% to £19.4m. Fuller’s said operating margins decreased from 11.8% to 11.4%, due to inflation in utilities and business rates in excess of sales growth and the impact of closing and refurbishing a relatively high number of pubs during the year; a total of 73 closed weeks compares to 60 in the prior year.
On plans for its site at Heathrow, Fuller’s said: “This development is a natural evolution for the company to capitalise upon our existing expertise trading in transport hubs such as London’s Waterloo, King’s Cross and Paddington stations. Located just eight miles from the brewery, London’s Pride will showcase the story of Fuller’s heritage in a modern setting within one of the world’s busiest airports.
"At this exciting addition to our estate, passengers from home and abroad will be able to sample our array of beers and freshly prepared food or choose a plane picnic from our ‘Grab & Fly’ range.
Tenanted Inns profits grew 18%, driven by the first full year of benefit from the 17 acquisitions in the prior year. Like-for-like profits were up 1% and average EBITDA per pub up 9%. The division grew revenues by 12% to £30.8m
Fuller’s launched its tenanted service agreement last March and 123 tenants have signed up to date, more than the aim of 100. Fuller’s said the new Beer Company strategy is in execution and includes: “Made of London” advertising campaign now being live; the introduction of new 500ml bottles, with all labels redesigned and updated; the launch of Frontier, its “new wave” craft lager.
On 4 June, Fuller’s bought Cornish Orchards for £3.8m. The company said: “Established in 1999, Cornish Orchards produces premium cider with genuine provenance, hand crafted from freshly pressed apples. The production facilities in Duloe, Cornwall are well invested with potential for further expansion on the site.
“The flagship brand, Cornish Gold is a refreshing, and truly delicious cider of uncompromising quality, making it a perfect fit with Fuller’s outstanding ales. The premium cider market is a strong growth area, with healthy margins and the full award winning range of ciders and artisan soft drinks are ideal for our portfolio, and will provide the opportunity to drive incremental sales through our existing sales channels.
“These unique additions to our portfolio allow us to offer a more extensive repertoire of drinks to our consumers.”
Over the nine weeks to 1 June, like-for-like sales in its managed pubs and hotels grew 7%, Tenanted Inns like-for-like profits were down 1% and total beer volumes were down 5%.
“It is worth noting that beer sales in week 9 last year were up 39% as pubs stocked up heavily in advance of the Diamond Jubilee weekend,” the firm said. “We are well positioned to respond to the continuing uncertainty in the economy over the coming year and will focus our activities towards our three strategic drivers for growth.”
