With Christmas fast approaching businesses around the country are seeking office party venues, giving the pub and restaurant sectors a welcome boost to their end of the year takings. At Greene King, executives are hoping that the festive season will allow annual sales to rise further following an exceptionally strong first half which saw records broken amidst a rising level of consumer confidence.
In the 24 weeks to the 19th of October, Greene King saw sales and revenues reach a new record of £614.9 million. However, due to the sale earlier in the first half of 275 pubs to Hawthorn Leisure, profit before tax and exceptional items fell by 3.5 per cent to £82.6 million.
When this effect is stripped out, profits grew by 3 per cent. Greene King hopes that this strong profits growth will be built upon next year should shareholders vote to take over the Spirit pubs group for a sum of £773.6 million.
Chief executive Rooney Anand remains cautious about the outlook for the pubs sector due to certain economic conditions dampening consumer enthusiasm for spending on luxuries.
He says; “With real incomes struggling to grow, customers remain cautious about spending on eating and drinking out.
“As a result, we will continue to tailor our customer focused strategy to ensure we deliver another year of progress, long term growth and strong returns to our shareholders.”
The Abbot Ale brewer currently operates 1,904 pubs throughout Great Britain, yet should the takeover of Spirit prove successful its estate will grow to 3,100. Around 1,800 of these pubs would be managed according to early forecasts meaning there is a huge potential for revenue growth at comparatively minimal cost to the company.
According to the most recent trading updates by Greene King, the second half of its financial year has got off to a flying start with the company’s bookings for the Christmas party period rising by 7.2 per cent year on year. However, the pub group’s spending tracker has shown huge discrepancies on a regional basis, with consumers in the south of the country spending a great deal more than in the north.
Greene King is now hoping that policies announced this week by Chancellor George Osborne in his Autumn Statement will further ease the pressure upon the pub sector, particularly the abolition of the 400 year old beer tie system last month.
New regulations, which mean pub tenants are no longer bound to buy their alcohol and related produce from their landlords, could certainly have a huge impact upon the brewer’s non-managed estate – yet with Greene King in line to acquire a large managed portfolio from Spirit, changes to the business rates system in particular could see revenues rise and operating costs drop dramatically.
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