Away from the headlines about falling beer sales and bankrupt publicans, Fuller Smith & Turner continues to show that it is possible to brew beer and operate pubs very successfully.
A key contributor to the group’s impressive growth was the accommodation business. Fuller worked hard to maintain room rates in the cyclical part of its operations when the country went into recession and has been reaping the rewards as occupancy picks up. Accommodation, which now accounts for 7 per cent of managed pub revenue after 11.4 per cent like for like growth in the six month period, was far from the only bright spot.
The managed pub business as a whole, which accounts for 62 per cent of profits, increased like for like revenues by 3.3 per cent and the pace is picking up with 3.5 per cent growth for the 33 weeks to 13 November. Meanwhile, the tenanted pub business reported a 1 per cent rise in underlying profits. And the beer business managed to lifted sales volumes modestly despite a torrid UK market. A 25 per cent pick up in exports helped.
Lower interest rates provided a £500,000 boost to profits, but borrowing charges will now rise as Fuller switches to a new loan facility. The group is wary of potential austerity-induced consumer weakness but its focus on London and the South East should make it relatively resilient.
Numis Securities forecasts full-year pre-tax profits of £28m and EPS of 35.1p (2010: £26.6m/33.6p).
| Fuller, Smith & Turner (FSTA) | ||||
|---|---|---|---|---|
| ORD 'A' PRICE: | 623p | MARKET VALUE: | £355m | |
| TOUCH: | 610-635p | 12-MONTH HIGH: | 640p | LOW: 480p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 388p | NET DEBT: | 43% | |
| Half-year to 25 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 117 | 15.1 | 19.2 | 4.50 |
| 2010 | 122 | 16.8 | 23.7 | 4.75 |
| % change | +4 | +11 | +23 | +6 |
Ex-div:15 Dec Payment:04 Jan | ||||
