Greene King drives on amid strong headwinds
L Boss says Spirit integration now completed l Believes group will be resilient despite pressures
Pubs and brewing group Greene King posted strong annual trading figures yesterday as it forecast that its “affordable treats” would be resilient to squeezed household finances.
As average earnings growth continues to be outstripped by inflation, Greene King chief executive Rooney Anand said: “Affordable treats were resilient the last time the cold winds blew between 2007 and 2009.
“People might cancel or delay work on the house or changing the car, but going out for a meal or a drink at the pub was fine.”
Anand said he believed the same was true amid current political uncertainty and the recent London and Manchester terrorist attacks. “The election result was met with some surprise and concern, and the horrific terror attacks affected three of our pubs. But people get on with their lives,” he said.
His comments came as Greene King – whose 300odd Scottish pubs include the Albanach in Edinburgh’s Old Town – announced that underlying profits climbed 6.6 per cent to £273.5 million in the year to end-april.
Like-for-like sales rose 1.5 per cent. Beer sales by volume of the group’s own brands – which include Belhaven Best, Abbot Ale and IPA – fell 2.8 per cent in the year. However, they have returned to growth in the first eight weeks of the new financial year. Anand said the integration of the strategic acquisition of rival Spirit Pub Company for £774m in 2015 had been completed – a year ahead of schedule.
Cost and buying synergies from that acquisition also saw it make £35m of savings in the latest financial year, £5m more than originally forecast.
However, the cost of the integation, alongside historical tax settlements with HMRC, saw Greene King’s statutory pre-tax profits dip 2.6 per cent to £184.9m.
Talking of future synergies, Anand said he believed there was “plenty to go after in the next two or three years”. He said there had been many brand conversions between theexistinggreenekingestate and the Spirit pubs acquired, with resulting sales uplifts of more than 30 per cent.
The group operates more than 2,900 pubs, including brands such as Greene King Local Pubs, Hungry Horse, Flaming Grill and Chef & Brewer.
Greene King said its leased pubs saw net annual profits rise 5 per cent after a slower start to the new year due to tough comparatives from a year earlier following the Spirit deal. Gordon Timber has cut the ribbon on its new office facility in Nairn. The construction was carried out using timber from the firm’s own sawmill. Gordon Timber joint managing director Scott Gordon, second from right with, from left, architect Robert Carrick, chairman Ronald D Gordon and joint MD Ronald Gordon, said: “The completion of the new building is consistent with our drive to strengthen the effectiveness and efficiency of the company’s operations.”