UK: Greene King cheers beer profits growth in H1
- Beer unit's half-year operating profits up by 4.5% to GBP16.3m (US$25.6m)
- Beer sales rise by 8.5% to GBP83.1m
- Beer volumes up by 2% in a declining market
- Group profits under pressure from one-off costs
Old Speckled Hen brewer Greene King sells more beer in H1
Greene King has reported higher sales and profits for its beer business in the first half of its fiscal year, helped by consumers seeking respite from gloomy economic news.
Greene King's net beer sales rose by 8.5% for the 24 weeks to 16 October, to GBP83.1m (US$130.6m), the Old Speckled Hen ale brewer said today (1 December). Despite the ongoing economic malaise affecting the UK, the beer and pub group said that it was boosted during the period by consumers seeking "everyday indulgence".
Operating profits in its beer business rose by 4.5% on the same period of last year, to GBP16.3m, although operating profit margin declined slightly. Exports, sales to 'free trade' pubs and off-trade demand all contributed to a 2% rise in group beer sales by volume, against a UK ale market down by 6% for the same 24 weeks, it said.
The performance contributed to Greene King's overall results, but, as with results produced earlier this week by rival group Marston's, it was the growth of on-trade food sales that stood out at group-level. Food sales rose by 16% for the period, inflated by the acquisitions of Realpubs and Capital Pub Co, Greene King said.
As a company, Greene King report half-year net sales up by 8.9% to GBP527.5m. However, higher impairment costs on underperforming pubs, and costs associated with acquisitions, ate into profits. Operating profits slipped by 1.8% to GBP95.1m, while net profits dropped by 7.3% to GBP48.1m.
Greene King suffered most in its Pub Partners business unit, which encompasses tenanted, leased and franchised pubs. In this unit, net sales and operating profits for the 24 weeks dropped by 2% to GBP76.9m and GBP34.7m respectively. The group, however, disposed of 42 pubs in the unit over the period, taking its total Pub Partners estate down to 1,493. It plans to shed another 50 pubs in the second-half and reduce the estate to 1,200 by 2014.
For the company announcement, click here.
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