Uncertainty ahead of the EU referendum threatened to dry up sales at Greene King (GNK) in the reported period. But the pub giant's £774m takeover of Spirit Pub Company fuelled growth across its divisions and sent adjusted operating profits up 53 per cent to £256m.
Like-for-like sales rose 1.5 per cent in the key managed business, as strong growth at Chef & Brewer pub restaurants helped it to best the broader market. Moreover, comparable net income grew by 2.7 per cent in the tenanted and leased estate, as the Spirit deal and the disposal of 48 pubs contributed to a 14 per cent rise in average cash profits per pub. And additional sales to Spirit-managed pubs helped to drive operating profits up a tenth in the brewing and brands division.
Management delivered £16.7m in cost savings from integrating Spirit, ahead of its target. It also plans to reduce the number of brands in its portfolio. For a start, it intends to rebrand the bulk of about 100 Fayre & Square pubs as Hungry Horse, one of its growth formats. Broker N+1 Singer expects pre-tax profits of £292m, giving EPS of 75.8p (from £257m and 69.9p in FY2016).
| GREENE KING (GNK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 759p | MARKET VALUE: | £2.3bn | |
| TOUCH: | 758.5-759.5p | 12-MONTH HIGH: | 985p | LOW: 731p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 606p* | NET DEBT: | 109% | |
| Year to 1 May | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.14 | 125 | 47.6 | 24.80 |
| 2013 | 1.19 | 111 | 44.1 | 26.60 |
| 2014 | 1.30 | 105 | 44.2 | 28.40 |
| 2015 | 1.32 | 118 | 40.9 | 29.75 |
| 2016 | 2.07 | 190 | 64.4 | 32.05 |
| % change | +58 | +61 | +57 | +8 |
Ex-div: 11 Aug Payment: 12 Sep *Includes intangible assets of £1.30bn, or 419p a share | ||||
