Record results for Greene King but margin dips

Old Speckled Hen brewer and pub chain owner Greene King unveiled another set of record results, with food sales once again driving growth.

Adjusted profit before tax in the 24 weeks to mid-October rose 5.6% to £77.2m from £73.1m at the interim stage last year. Exceptional charges have once again put a dent in profits, however; once these have been taken into account, pre-tax profits actually fall, to £56.7m, from £60.0m last year.

Chief among the exceptional charges are impairments relating to the value of property, plant and equipment. This time round, Greene King took a £16.2m hit on the value of these assets, up from last year's charge of £12.7m.

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Revenue rose 9.0% to a record £527.5m from last year's half-year sales of £484.1m, with most of the growth coming from Greene King Retail, which generates more than 70% of the company's revenue.

Revenue in this division rose 11.8% to £367.5m from £328.8m, helped by the fact that the average number of sites trading in the reporting period moved up by 3.7% to 922 from 889. Revenue per pub rose 7.8% from a year earlier to an average weekly turnover of £16,600. Like-for-like (LFL) sales were up 3.8%, consisting of 1.3% volume growth and a 2.5% price/mix improvement.

The retail division saw total food sales growth of 16.3% in the period and LFL food sales growth of 4.9%.

Earnings before interest, tax, depreciation and amortisation (EBITDA) per site, coincidentally, was also up 3.7%, to £97,300 from £93,800 last year.

In the tenanted, leased and franchised pub operations, what the group calls its Pub partners division, revenue dipped 2.3% to £76.9m from £78.7m last year, as the average number of pubs trading declined 5.2% to 1,489 from 1,570 the year before.

EBITDA per pub rose 3.3% to £25,800 from £25,000.

On the brewing side - Greene King brews more real ale than any other brewer in Britain - revenue rose 8.5% to £83.1m from £76.6m last year. EBITDA climbed 3.3% to £18.8m from £18.2m at the half-way point in 2010.

For the group as a whole, the underlying operating margin ebbed to21.9% from 22.7%.

Net debt at the half year was £1,501.8m, an increase of £91.6m from the previous year end, as the company invested £115.1m in expanding its retail estate.

"Falling consumer confidence and the weakening of the UK economic recovery suggest that we will face another tough trading environment in 2012," admitted Rooney Anand, Greene King's chief executive. "Despite this, there are still significant opportunities for growth, and we believe our strategy to grow our Retail estate and our share of the eating out market will help us to maintain our track record of strong earnings and dividends," he added.

The interim dividend has been increased by 6.3% to 6.7p.

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