JD Wetherspoon is keeping its fingers crossed that the forthcoming Budget doesn't bring another round of disproportionately high duty increases on beer: the pub group has already slashed its new opening programme in the face of flagging sales growth, and with mounting cost pressures it's hard to point to any positive catalysts for the shares.
A net 18 pubs were opened in the half, but the second-half opening plan has been cut from 30 to 20 pubs, and analysts believe expansion could be further curtailed if - as chairman Tim Martin suggests will happen - the chancellor whacks another 20p on a pint of beer. Along with higher taxes - which Mr Martin blames for the price advantage enjoyed by supermarkets over pubs - Wetherspoon is already struggling to pass on rising food, drink, business rates and utility costs on to its notoriously frugal customers. Although like-for-like drink sales rose 3.4 per cent over the half year, Wetherspoon was unable to push through meaningful price increase, which meant operating margins slipped 50 basis points to 8.9 per cent. Since the period-end, underlying sales growth has fallen to 0.7 per cent.
Broker Numis expects flat underlying pre-tax profits of £67.7m and EPS of 37.2p in the year to July 2012 (from £66.8m and 35.3p last year).
JD WETHERSPOON (JDW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 405p | MARKET VALUE: | £533m | |
| TOUCH: | 404-405p | 12-MONTH HIGH: | 473p | LOW: 371p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 138p | NET DEBT: | 288% | |
| Half-year to 22 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 525 | 32.2 | 16.5 | 4.00 |
| 2012 | 569 | 33.2 | 18.3 | 4.00 |
| % change | +8 | +3 | +11 | - |
Ex-div:25 Apr Payment:23 May | ||||
