Trade ‘encouraging’ as Punch posts £165.1m revenue for Q2

10-May-2024 - Last updated on 10-May-2024 at 09:03 GMT

Encouraging: a fall in inflation is expected to help Punch Pubs even further

Punch Pubs has reported trade is “encouraging with profitability ahead of the prior year” and expects to benefit further as the inflation situation improves.

The group, which operates more than 1,240 pubs, split into three divisions – Leased & Tenanted (L&T), Management Partnership (MP) and Laine Pub Company – added the easing of inflation is positively impacting L&T net income plus benefits from pubs converted to the MP estate since August 2021.

It added the acquisition of 24 Wear Inns sites on 29 April 2024, which cost about £17m, is predominantly freehold, including one long leasehold and three short leasehold properties, have all been converted to the L&T division and expects to move a third to the MP estate over the next 12 months.

Lfl sales growth

In its results for its second quarter (Q2) for the 28 weeks ended 25 February 2024, total revenue was £165.1m compared to £158.1m in the prior year period of 28 weeks to 26 February 2023.

All three divisions (L&T, MP and Laine) delivered like-for-like sales growth for the period when compared to the prior year.

Underlying EBITDA (earnings before interest, taxation, depreciation and amortisation) was £42.3m versus £37.5m for the same period last year while operating profit was £33.4m (£28.2m Q2 2023).

Punch Pubs spent £13.3m (£16.7m: Q2 2023) on expansionary and maintenance capital while capital expenditure also included improvements in energy efficiency.

70 pubs suitable for conversion

The group said: “We have identified the next tranche of pubs to convert to the MP model, having identified a population of up to 70 pubs that would be suitable for conversion. With conversion phased progressively over a three-year period.

“We are pleased with the strong returns on investment that we are seeing from past conversions and would expect to achieve similar returns on future conversions of between 20% and 30%.”

The group operates a community pub estate and therefore has limited exposure to the high street, city centre and late-night markets with a wet-led approach.

It added that being a drink-led community estate operator, its pubs tend to have a smaller footprint in terms of size and labour requirement, thus benefiting from lower fixed costs to operate.