UK: Wolverhampton & Dudley Breweries’ year trading was in line with expectations after a good summer
Wolverhampton & Dudley Breweries (W&DB) announced on Wednesday, September 27th, its 2,355 pubs had enjoyed strong summer trading as it positioned itself for rising costs and a possible slowdown in consumer spending, Reuters communicated on the same day. However, W&DB will have to find another £5million next year to cover increased energy and minimum wage costs.
W&DB said total like-for-like sales rose 2.4 percent at its 457 managed Pathfinder Pubs in the 51 weeks to September 23. At its Union Pub Company's 1,898 tenanted pubs, average pub profit was up by about 5 percent in the 51 weeks, it added in a trading update ahead of its year end on Sept 30.
W&DB warned that high energy prices and rising wages would add another 5 million pounds to next year's cost base and said it had moved 93 managed pubs into tenanted hands to avoid the cost of running them. “We expect that higher energy prices and a 6% increase in the minimum wage level will impact our overall cost base by around £5 million next year,” W&DB commented.
"We remain cautious on the outlook for consumer spending given recent increases in domestic energy costs, historically high levels of consumer debt, and some upward pressure on interest rates," W&DB said in a statement released on September 27.
“Detailed plans are in place in preparation for the smoking ban in England and Wales, which is due to come into force during the summer of 2007 or earlier... Our investment plans, both in managed and tenanted pubs, are well advanced... Over 85% of our pubs have gardens, patios or some form of outside trading area, allowing us to target opportunities and reduce risk.”
W&DB shares fell 1.5 percent to 14.23 pounds by 8:06 a.m., valuing the group at around 1.1 billion pounds.
Chief Executive Ralph Findlay told Reuters most of the pubs moved into the hands of landlords were its smaller pubs taking 8,000 pounds to 9,000 pounds per week, compared with an average of 13,500 pounds at its managed Pathfinder Pubs estate.
"On average we save about 10,000 pounds per pub per year when we transfer those smaller pubs from management to tenanted," he said. "Depending what happens with future costs, it is possible we'd be looking at maybe another 20 or so per annum."
Findlay said W&DB was one of the most conservatively-geared pub operators and it would look at buying more freehold community pubs or returning cash to shareholders via buybacks. "We'd keep both options under review and take any options that there were," he said.
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