Fuller’s hit by extra costs following Asahi deal

15-Nov-2019 - Last updated on 15-Nov-2019 at 09:45 GMT

Transitional year: 'there have been many moving parts to navigate and we have incurred some greater than anticipated costs as a result,' according to Fuller's Simon Emeny

Fuller, Smith and Turner has warned the cost of a ‘complex separation period’ after selling its beer business to Asahi were higher than expected.

Announcing its financial results for the 32-week period to 9 November, Fuller’s revealed a total sales increase of 5.2% from its estate of 215 managed pubs and hotels, in addition to like-for-like growth of 2.3%.

However, Fuller’s, which sold its brewing business to Asahi for £250m in January – meaning that its historic Griffin brewery and its Cornish Orchards, Dark Star and Nectar Imports brands will also move to Asahi's ownership – revealed additional cost had been incurred to “assist the business through this complex separation period”.

“It is anticipated that the current level of overhead will continue until the TSA agreement concludes by May 2020. Thereafter, the Company will be able to transition to a structure more appropriate for a focused premium pubs and hotels business,” the operator’s latest statement continued.

Consequently, Fuller’s stated that adjusted profit for the full year ending 28 March 2020 will be in the region of £31m – “broadly in line with the prior year on a comparable basis”.

Transitional year

In addition to the £250m Asahi deal in January, Fuller’s also completed a £40m deal to acquire Cotswold Inns & Hotels and its seven freehold country inns and hotels as well as eight staff cottages.

Alongside a board reshuffle following the disposal of its beer business, the operator also revealed to The Morning Advertiser that it was working towards a target of 1,000 bedrooms across its pub estate.

“This is a transitional year for the Company following the sale of the brewing business and subsequent separation of a highly integrated business,” Fuller’s chief executive Simon Emeny said.

“There have been many moving parts to navigate and we have incurred some greater than anticipated costs as a result which have had a short term impact on our financial performance. Whilst we are taking the action to address these, the impact of this will not be felt in the current financial year.

“Trading is good in light of exceptionally strong comparatives last year and the continued challenge of cost inflation facing our sector. Our strategy remains on track and we will continue to execute our growth ambitions and maximise the opportunities open to us as a focused pubs and hotel business.”

Fuller’s will release its half year results on 12 December 2019.