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Punch Taverns Q1 profits hit hardest by falls at leased pubs
The U.K.'s largest pub group, Punch Taverns Plc, today said it expects short-term profitability to be affected by the continued tough trading environment and its smaller pub estate, but it expects continued investment in its estate to benefit performance in the longer term.
In a trading update covering Q1, the 16 weeks to Dec. 12, Punch Taverns said comparable profits continue to show a similar rate of decline to that reported in the last financial year and it expects the weak consumer environment to continue putting pressure on spending in its pubs.
In fiscal 2009, ended Aug. 22, the firm posted a 39% drop in underlying pretax profit. This rate of profit decline has continued so far this fiscal year at its leased pubs, Punch Taverns said.
Sales at its managed pubs so far this year are down 1.6% on the year. Overall sales have been affected by relatively soft trading in both the premium food and price-led food pubs, as families cut back on eating out.
Punch, which has over 7,000 pubs across Britain, said it was investing around £2 million each month helping struggling tenants stay afloat, up from £1.6 million last year. The support is provided through rent concessions and product discounts.
It said it is beginning to see the benefit of this assistance as the number of pub returns from licensees is materially down on the year. The company is also grappling with net debt of £3.347 billion, which it has reduced by only £150 million since the end of its last financial year.
In the first 16 weeks of the year Punch disposed of 352 pubs, 224 from the turnaround division, 114 from the core leased estate and 14 from the managed estate, realising net proceeds of £127 million. The disposals are in line with book value and at average multiples of c.11 times EBITDA. Their programme to dispose of non-core assets has resulted in the disposal of £40 million (annualised) EBITDA in the last financial year and a further £11 million (annualised) EBITDA in the year to date. Given the success to date with this programme they have raised their estimate for full year disposals to c.£300 million.
Shares in Punch closed at 81.15 pence on Tuesday, valuing the business at £519 million.
In a trading update covering Q1, the 16 weeks to Dec. 12, Punch Taverns said comparable profits continue to show a similar rate of decline to that reported in the last financial year and it expects the weak consumer environment to continue putting pressure on spending in its pubs.
In fiscal 2009, ended Aug. 22, the firm posted a 39% drop in underlying pretax profit. This rate of profit decline has continued so far this fiscal year at its leased pubs, Punch Taverns said.
Sales at its managed pubs so far this year are down 1.6% on the year. Overall sales have been affected by relatively soft trading in both the premium food and price-led food pubs, as families cut back on eating out.
Punch, which has over 7,000 pubs across Britain, said it was investing around £2 million each month helping struggling tenants stay afloat, up from £1.6 million last year. The support is provided through rent concessions and product discounts.
It said it is beginning to see the benefit of this assistance as the number of pub returns from licensees is materially down on the year. The company is also grappling with net debt of £3.347 billion, which it has reduced by only £150 million since the end of its last financial year.
In the first 16 weeks of the year Punch disposed of 352 pubs, 224 from the turnaround division, 114 from the core leased estate and 14 from the managed estate, realising net proceeds of £127 million. The disposals are in line with book value and at average multiples of c.11 times EBITDA. Their programme to dispose of non-core assets has resulted in the disposal of £40 million (annualised) EBITDA in the last financial year and a further £11 million (annualised) EBITDA in the year to date. Given the success to date with this programme they have raised their estimate for full year disposals to c.£300 million.
Shares in Punch closed at 81.15 pence on Tuesday, valuing the business at £519 million.
Wed, 16th Dec 2009