Strong First Half by Greene King
Greene King, the UK brewer and pub group, has reported a growth in operating profit across all its divisions – Retail, Pub Partners and Brewing & Brands – for the for the 24 weeks ended 18 October 2015. Total revenue grew 49.2% to £917.7 million, including a £269.3 million contribution from the acquisition of the Spirit Pub Company which was completed on 23 June 2015, adding 791 managed pubs and 416 tenanted and leased pubs to the estate.
Excluding Spirit, revenue increased 5.4% to £648.4 million. Operating profit grew 46.1% to £180.2 million, including a £51.4 million contribution from Spirit and reflecting £2.1 million of synergy achieved to date. Excluding Spirit and synergies, the Greene King business delivered 4.1% growth in operating profit to £128.3 million. Greene King now expects to exceed its initial guidance on cost synergies and has raised the synergy target to £35 million.
At the period-end, Greene King operated 3,069 pubs, restaurants and hotels across England, Wales and Scotland, of which 1,833 were retail pubs, restaurants and hotels, and 1,236 were tenanted, leased and franchised pubs. Its leading retail brands and formats include Hungry Horse, Old English Inns, Farmhouse Inns, Metropolitan, Chef & Brewer, Flaming Grill and Loch Fyne Seafood & Grill. 83% of the estate is either freehold or long leasehold.
Greene King also brews quality ale brands from its Bury St. Edmunds and Dunbar breweries, and is the UK’s leading cask ale brewer and premium ale brewer. Its industry-leading portfolio includes Greene King IPA, Old Speckled Hen, Abbot Ale and Belhaven Best.
Rooney Anand, chief executive of Greene King.
The strategy of the Brewing & Brands division is to drive growth through a successful core portfolio of national ales supported by an innovative range of seasonal and ‘craft’ ale brands. Brewing & Brands achieved further progress in the period with OBV up 3.6% including additional volumes to Spirit pubs and against the UK ale market up 0.8%. Its share of the total ale market increased 0.4%pts to 10.5%. Revenue grew 4.7% to £95.4 million while operating profit grew 5.1% to £14.5 million, leading to a 10bp increase in the operating margin. During the period, the operating margin was positively affected by both channel mix and additional cost efficiencies realised in the second half of the last financial year.
Rooney Anand, chief executive of Greene King, comments: “It has been a strong first half, with the Greene King business strengthening and significant progress made in the Spirit integration. Like-for-like sales growth in Greene King Retail improved during the half and both Pub Partners and Brewing & Brands delivered profit growth and margin expansion.”
He adds: “We completed the acquisition of Spirit Pub Company and, by combining the best of both companies, made good progress in capturing value from the acquisition and creating the UK’s leading pub hospitality company. We believe we have the best portfolio of retail pub brands, the best pub assets and the most talented team which, when combined with the strong contribution from synergies and the benefits of our enlarged scale, will ensure we continue delivering value to our customers and our shareholders.”
