Makro event buoys Booker

Broker Peel Hunt has upgraded forecasts and now expects full-year adjusted pre-tax profit of £117m, giving adjusted EPS of 5.4p (2013: £96.9m and 4.6p), but admits Makro could make even more than the £10m it has pencilled in for this year. Booker boss Charles Wilson says the integration of Makro is going "exactly as planned", and is expected to deliver £26m of cost savings this financial year, £30m the year after and £32m in 2016. Already, its performance has improved, with non-tobacco sales down just 0.6 per cent in the 12 weeks to 13 September - promising given the historic run rate of double-digit declines. Clearly, Makro is benefiting from Booker's expertise in meat, soft drinks and premium catering ranges, but it is helping Booker improve its fish, frozen and non-food ranges, too.

Like-for-like sales of non-tobacco products rose 5 per cent during the six months, with sales to caterers up 9 per cent to £712m and revenue from fruit and vegetables growing 18 per cent. Booker’s retail arm, Premier, enjoyed 8 per cent growth, although weak demand for tobacco meant like-for-like sales to retailers fell slightly to £1.2bn. Overseas, Booker's Indian business is doing well, opening two sites in the period. India might seem an odd market in which to expand, but in fact it makes sense given Booker supplies many Anglo-Indian businesses in the UK, such as restaurants and corner shops. And the expertise gained in Indian foods has strengthened the British business.