Punch toasts better summer trading
Pubs group Punch Taverns toasted a pick-up in quarterly earnings as punters returned during July's heatwave, but said talks on slashing its £2.4 billion debt mountain drag on.
The landlord said like-for-like income in its core business of about 3,000 leasehold pubs grew 0.4% in the three months to mid-August, versus a 2.4% drop during the year to August 17.
But annual pre-tax profits slumped by two-thirds to £17 million, as more poor performance in its "non-core" estate of 1,100 pubs and the cost of servicing its heavy debt burden continue to weigh.
Punch, which is shrinking after a debt-fuelled acquisition spree under former management, split from the Spirit managed pubs business in 2011.
It sold 433 pubs during the year for £149 million, and over the next four years hopes to sell most of its non-core pubs.
Non-core pubs earned just £30,000 in profit each during the year - down 5% on a year earlier - and make most of their money from drinks, leaving them vulnerable to the trend for customers to drink at home.
But pubs in its core estate make average profits of £74,000 each, and are increasingly focusing on food sales. Their takings from food now account for 27% of revenues, up from 22% in 2011.
Punch executive chairman Stephen Billingham said the group has made "excellent progress" with its operational turnaround, and said core pubs are on course to grow underlying income by 1% during its latest financial year.
The group said getting various groups of investors signed up to a restructuring plan for its debt is taking longer than expected, but said it believes a "consensual restructuring" can be launched by the end of the year.
It had hoped to seal a deal on reducing its debt pile by July. Punch admitted there is "material uncertainty" about its going concern status, warning lenders could call in their loans and send the group under if the financial rescue talks fail.
Stripping out exceptional items including redundancy costs and losses on financial instruments, pre-tax profits were down 23% to £49 million. Revenues fell 7% to £457.6 million.