“Shall I compare thee to a summer's day?” begins Shakespeare’s eighteenth sonnet. If the day in question fell in the lovely and temperate summer of 2018, most pubcos would rather you didn’t. But buoyed by its ‘Shakespeare in the Garden’ event series, Fuller, Smith & Turner (FSTA) somehow managed to grow like-for-like sales in the half-year to 28 September, posting a 1 per cent increase in adjusted earnings per share in the process.
The managed estate fared particularly well, as normalised growth of 2.7 per cent outstripped the performance of the Coffer Peach Business Tracker. More pint sales don’t always equal more profits, however. After accounting for the combined effect of wage inflation, pension auto-enrolment increases, higher business rates and rising maintenance costs, the operating margin dropped 100 basis points to 14.1 per cent.
As investors will have noticed, this resilient underlying performance has been overshadowed by issues with the sale of the beer business to Asahi, which accounts for the discrepancy between pre-tax and net profits in the table below. Chief executive Simon Emeny said the costly migration of an enterprise resource planning system was “not a case of what went wrong”, but rather the unforeseen effects of a legacy system ill-suited to the spin-off.
Analysts at Stifel expect adjusted earnings of 62.9p per share for the year to March 2020, rising to 71.6p in FY2021.
| FULLER, SMITH & TURNER (FSTA) | ||||
| ORD PRICE: | 920p | MARKET VALUE: | £298m* | |
| TOUCH: | 920-948p | 12-MONTH HIGH: | 1,120p | LOW: 758p |
| DIVIDEND YIELD: | 2.2%** | PE RATIO: | 3 | |
| NET ASSET VALUE: | 1,570p* | NET DEBT: | 5%^ | |
| 26 weeks to 28 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 165 | 15.1 | 29.7 | 7.8 |
| 2019 | 175 | 11.1 | 316 | 7.8 |
| % change | +6 | -26 | +965 | - |
| Ex-div: | 19 Dec | |||
| Payment: | 10 Jan | |||
| *Does not include family-held 'B' and 'C' shares. **Excludes 'D' share £69m capital return. ^Excludes £95.8m of lease liabilities | ||||
