Belfast Telegraph

Greene King cheers profits increase despite pub industry challenges

Pub group Greene King has toasted rising annual sales and profits, but warned of economic and consumer woes ahead.

The firm said it outperformed the market with like-for-like pub sales up 1.5%, while underlying profits lifted 6.6% to £273.5 million in the year to April 30.

It outlined a raft of challenges affecting the pub and brewing industry over the next few years, which it said are set to "intensify" amid weakened consumer confidence caused by surging inflation.

The group said it believed visits to the pub will remain an "affordable treat" despite cash-strapped consumers cutting back on spending elsewhere.

It also hopes the group's bigger scale since taking over rival Spirit Pub Company for £774 million in 2015 will continue to help it withstand surging cost pressures.

Greene King is bracing for costs to rocket by around £60 million over the new financial year, but it has plans in place to offset up to £45 million of the rise.

Chairman Philip Yea said: "Uncertainty affecting both business and consumer confidence is likely to continue following the recent election and the unknown length and outcome of the Brexit negotiations.

"Alongside the rest of the industry, we are experiencing significant cost pressures but Greene King's scale and the consequent cost efficiencies, not least from the Spirit integration, should enable us to mitigate much of the cost increases."

It completed the integration of the Spirit business a year ahead of schedule, which saw it make £35 million of savings in the year to April 30.

But costs of the integration, alongside historic tax settlements with HMRC, saw bottom-line pre-tax profits sink 2.6% to £184.9 million.

Suffolk-based Greene King, founded in 1799, said its leased pubs saw net annual profits rise 5%, although they had suffered a slower start to the new year due to tough comparatives from a year earlier following the Spirit deal.

Beer sales by volume of its own brands have returned to growth in the first eight weeks, following a fall of 2.8% in the year to April 30.

Analysts at Singer said Greene King's full-year results were in line with expectations, but noted the group's fears over a "difficult trading environment persisting for a few years" and mixed comments on current performance.

Greene King has more than 1,760 managed pubs, restaurants and hotels, as well as over 1,150 leased pubs and a brewing arm.

It employs around 44,000 staff.