The UK's largest pub group, Punch Taverns, has reported an upturn in trading during the final weeks of its fiscal year, but the firm is still spending GBP2m (US$3.1m) per month to prop up poorly performing bars.

Punch Taverns said today (24 August) that it expects earnings before tax and exceptional items for the year to 21 August to be marginally better than previously expected. Improved operating standards, increased pub refurbishment activity and favourable summer weather have boosted the firm in the fourth quarter, it said.
The group added that the rate of pub failures within its business has halved on levels reported in the previous year.

That said, Punch warned that lower drinks sales and reduced income from rent, as a result of failed pubs, will cause like-for-like profits to fall for the year. It added that it continues to pay GBP2m per month in financial support to struggling premises.

"Our strategy of disposing of non-core assets has continued during the course of the year generating proceeds of approximately GBP300m at an average multiple of 16 times EBITDA," said Punch. "Since the start of the financial year we have reduced gross debt by £684 million, being 17%."

It added: "We expect the trading outlook in the near term to continue to be uncertain, particularly given the potential impact of the June budget on consumer spending into next year."