UK: Greene King said it was trading in line with expectations

Brewer and pubs operator Greene King announced on December 6 it was trading in line with expectations as, helped by acquisitions, it posted a 23 % rise in profit up to £55.8 million in the first-half of the year as of 16 October 2005.

The Suffolk--based brewer of Greene King IPA, Abbot Ale and Old Speckled Hen beers said in a statement it made 55.8 million pounds profit before tax and exceptional items in the 24 weeks to October 16 on turnover up 19 percent to 360 million pounds. The interim dividend was raised 11 percent to 5.8 pence.

Turnover was up 19% to £359.9m, and trading margins overall grew from 22.8% to 24.0%.

Turnover in managed houses division, Pub Company, was up 18% at £244.4m. Trading profit was up 26% at £50.3m, and the trading profit margin therefore improved from 19.2% to 20.6%.

125 pubs benefited from capital developments, representing £14m of capital spend. Total capital investment in the division was £17.1m, with a fully-costed return on investment of 16%. Total (invested and uninvested) like-for-like sales in the 24 weeks improved by 1.7%. Following the successful acquisition of the Laurel neighbourhood estate, the average number of pubs trading during the period was 786, against 721 in the equivalent period in 2004/5.

Rooney Anand, Greene King chief executive, comments: “This is another strong set of results with all of our divisions delivering good organic growth at improved margins. We have also benefited from our targeted acquisitions of Laurel and Ridley’s, both of which have been successfully integrated ahead of plan.

“Trading in our divisions remains in line with our expectations and there will be a full contribution from Belhaven in the second half. As a result, we remain confident of achieving a successful outcome for the year as a whole. We believe that the inherent strength of our business, in particular the quality of our people, our brands and our pub estate, combined with a proven strategy, will create further opportunities for profitable growth in the future.”

Greene King continues to support its real ale brands, even as the majority of the industry has shifted marketing to lagers. The period saw innovative new advertising campaigns for Greene King IPA and Abbot Ale, and format and packaging innovation for Old Speckled Hen. Greene King IPA continues to enjoy the number one position by volume in the real ale market, while Abbot Ale is strong in the premium segment, and Old Speckled Hen is the number one premium ale brand in take-home.

In the 24 weeks, own-brewed volume was up 8%. Greene King IPA grew 7% by volume and Old Speckled Hen by 10%. The Beer To Dine For now has distribution in 50% of UK supermarkets.
We were able to improve trading margins from 21.8% to 22.7% as a result of purchasing synergies and other efficiencies.

The Bury St Edmunds brewhouse is running at 95% capacity. We have an option to deploy a third shift as and when required, and have been piloting this option during the period.

A new bottling line, located just outside Bury St Edmunds, is due to open in March 2006. This facility will increase our operational flexibility and cost efficiency.

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