For several years, tales of woe have abounded from the recession and debt blighted pub industry but, for all that time, Fuller, Smith & Turner has been ratcheting-up both profits and dividends. Indeed, over the last five years, the pub group has increased underlying profits by 71 per cent and its dividend is up 49 per cent.
The managed pub and hotel business, which accounts for about half of the group’s profits, did most of the work in securing a 10 per cent rise in underlying group pre-tax profit last year. It managed a 3.9 per cent increase in like-for-like sales and boosted operating margins from 11.5 per cent to 12.3 per cent.
Operating profits from the tenanted pub business came under pressure due to Fuller's decision to cap inflation-linked rent rises at 3 per cent - which didn't keep up with overhead increases. Nevertheless, profits were flat on a 3 per cent increase in revenue to £26.9m.
High costs also meant brewing profits fell 1 per cent to £8.8m, despite a 6 per cent increase in revenue to £104m. Rising duty continues to dent UK sales. Moreover, UK sales volumes fell 4 per cent which was offset by a 16 per cent rise in volumes to export markets, which now accounts for one in every seven beer barrels sold.
After swooping on a number of iconic London pubs during the property market nadir, Fuller took a breather last year and didn't make any acquisitions. In fact, disposals meant pub numbers dropped by eight to 358. This helped bring net debt down by £19.2m to £88.5m. Four acquisitions have been made in the new financial year so far with plenty of fire power for more.
Broker Panmure Gordon forecasts pre-tax profits for 2012 of £29.7m and EPS of 37.5p (2011: £29.3m/36.7p).
| Fuller, Smith & Turner (FSTA) | ||||
|---|---|---|---|---|
| ORD 'A' PRICE: | 636p | MARKET VALUE: | £357m | |
| TOUCH: | 641-650p | 12-MONTH HIGH: | 650p | LOW: 539p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 420p | NET DEBT: | 37% | |
| Year to 2 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 199 | 42.2 | 52.1 | 9.09 |
| 2008 | 203 | 23.8 | 34.3 | 9.70 |
| 2009 | 210 | 14.4 | 16.0 | 9.85 |
| 2010 | 228 | 26.8 | 34.4 | 11.0 |
| 2011* | 242 | 31.0 | 44.1 | 11.8 |
| % change | +6 | +16 | +28 | +7 |
Ex-div: 29 Jun Payment: 3 Aug *53-week period | ||||
