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UK: Punch Taverns gets World Cup boost, outlook gloomy

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Football fans watching the FIFA World Cup have boosted sales at Punch Taverns in recent weeks, but the UK pub group warned that a rise in unemployment could damage future trading.

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World Cup trading has seen Punch swing to year-on-year sales growth in recent weeks, helping to narrow a decline in sales for the company's fiscal year-to-date, the group said today (6 July).

Like-for-like sales in managed pubs for the 44 weeks to 26 June fell by 2.7% on the same period of the previous year, reflecting improvement after sales in the first 28 weeks of the year slipped by 3.4%.

However, Punch predicted ongoing tough times for the pub trade amid duty and value added tax rises and a precarious UK economy.

"We expect the trading outlook in the near term to continue to be uncertain," said Punch, which is the largest pub owner in the country.

"The tax rises and reduction in public spending announced in the recent budget will inevitably put further pressure on unemployment levels, reduce disposable incomes and constrain consumer confidence.

"Against this backdrop, we believe it is sensible to plan cautiously and have prepared our financial plans accordingly."

Punch said it was disappointed that the Government has maintained the previous administration's duty tax "escalator" which provides for annual duty tax rises of 2% above inflation on alcoholic drinks.

The firm will continue to dispose of underperforming pubs and has reduced net debt by 16%, to GBP638m (US$968m), since the beginning of its fiscal year. The company added that it has no near-term refinancing requirements.


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