Refreshing results
Premium ales lift brewer Fuller’s profits
THE growing thirst for premium craft beers resulted in a bumper summer for Fuller Smith and Turner, even amid steadily falling pint sales for the pub and brewing business.
The consumer shift away from everyday drinking establishments towards high-end beverages and gastropubs has played to Fuller’s strengths while down-market chains are forced to overhaul their offerings.
The West London brewer, whose beers include London Pride and ESB, said the steady drive towards higher margin craft beer brands helped it grow operating profits by 8pc in its first half, even as total beer and cider volumes dropped 4pc. The premium pints, including Frontier craft lager, helped drive Fuller’s revenue up 11pc to £197.6m, with profits before tax and exceptionals for the six months to September 24 up 6pc to £22.8m.
The largest share of its profits came from Fuller’s 193 managed pubs and hotels, which delivered a like-for-like sales increase of 3.4pc in the first half, supported by growth in the pub chain’s food offering. Food sales rose by 3.6pc with drinks and accommodation both rising by 3.3pc. In contrast the 197 pubs which are leased out to tenants reported a 1pc decrease in operating profit and a 2pc slip in like-for-like sales.
The company toasted its steadily rising food and drink revenues by hiking the interim dividend 5pc to 7.25p.
Simon Emeny, Fuller’s chief executive for the past two decades, said the pub chain had managed to drive further growth, even following a record year in 2015 which included the Rugby World Cup, unseasonably hot weather in April and a later Easter.
However, challenges are looming over the coming years, he warned.
“The impact of increases in business rates and the national living wage, combined with uncertainty around the UK’s departure from the EU, make for changing times ahead,” he said.
The company expects the introduction of the living wage to have a financial impact of around £2m a year but has pre-empted the April 2017 introduction by selectively awarding it to employees from this month. In addition the brewer is cushioned from the full toll of the wage hike across the company as a whole because it will not apply to its beer-making division.
Fuller’s invested £28.6m in the business including the purchase of two landmark pubs – The Gun in Docklands on the outskirts of Canary Wharf and The Half Moon in the rapidly gentrifying district of Herne Hill in south east London.