UK: Enterprise Inns FY profits plummet
- Profits slump on pub downturn
- Debt at GBP3.5bn
- No uplift in near term
A tough time for the UK on-trade has seen one of the country's largest pub groups, Enterprise Inns, report a slump in full-year profits.
Enterprise pre-tax profits collapsed to GBP11m (US$18.5m) for the 12 months to the end of September, against GBP209m for the previous year.
The group was dragged down by a GBP151m charge, forced upon the firm to reflect the falling value of its pub network. Prior to exceptional items, pre-tax profits for the year still fell by more than a fifth, to GBP208m from GBP263m.
Net sales fell to GBP818m, against GBP880m last year, reflecting an accelerated drop in consumer spending in the on-trade as a result of recession in the UK. Industry figures show that more than 50 pubs in the UK are closing down every week.
There is little respite ahead, according to Enterprise, which has an estate of more than 7,000 pubs. "The coming year is expected to be equally challenging, with weak consumer confidence compounded by further increases in duty and taxes," it said.
"Given the current economic climate and the planned reduction in the size of our pub estate, we are likely to see some further decline in trading profit in the short term," it added.
Enterprise CEO Ted Tuppen said the full-year results were "credible in very difficult circumstances".
The group picked out several positives in its performance, including a fall in the number of pubs taken into emergency care under its Temporary Management Agreement scheme. At the end of September, there were 183 pubs in the scheme, compared to a peak of 218 earlier in the year.
The firm has also reduced net debt by GBP142m, largely via the disposal of non-core pubs.
However, net debt is GBP3.5bn and the group will not pay a dividend for the year in order to focus on refinancing the sum owed. It plans to refinance GBP1bn in May 2011.
"We shall remain focused on stabilising performance in the estate, accelerating the disposal of pubs which do not fit the profile of our business moving forward whilst working alongside good quality licensees to provide support and investment to develop our best pubs," said Enterprise.
"We remain confident that, in the medium term, the business will be in a good position to deliver positive returns for shareholders."
For the full announcement, click here.
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