UPDATE 1-UK pub operator Greene King posts lower profit on weak spending, higher costs
(Adds details on outlook, market comments and background)
June 28 (Reuters) - British pub operator Greene King Plc
on Thursday reported an 11.2 percent drop in full-year
adjusted pretax profit, hurt by softer consumer spending, higher
costs and bad weather at the start of the year.
Shares of the pub operator, which owns ale brands such as
Greene King IPA, Old Speckled Hen and Abbot Ale, fell as much as
6 percent in morning trade.
The company has been battling rising costs from the
government's minimum living wage increase, higher property
prices and unfavourable currency exchange rates.
Greene King said it expected 45 million pounds ($58.83
million) to 50 million pounds cost inflation for the new fiscal
year, as several industry-specific input costs continue to rise
ahead of headline inflation.
The company also said consumer confidence remained fragile,
despite a slight improvement since the end of last year.
"The current trading environment is still characterised by
subdued consumer confidence, intense competition and rising
costs," the company said.
Greene King, founded in 1799, operates 3,000 pubs,
restaurants and hotels across the UK.
Comparable sales for Pub Company, Greene King's key growth
driver, fell 1.2 percent compared with a rise of 1.5 percent a
year ago, due to slower food sales and higher costs.
Greene King said it was targeting a return to like-for-like
sales growth for Pub Company in the new financial year, as it
expects to save 30 million pounds to 35 million pounds.
The company said it has seen strong growth of drink sales
recently as it gains from FIFA World Cup matches and better
weather after a colder winter at the start of 2018.
Like-for-like sales at Pub Company were up 2.2 percent in
the first eight weeks of the new financial year.
"We are starting to see the benefits from the World Cup, as
more than half of consumers expect to watch an England game at
the pub," the company said.
Adjusted profit before tax fell to 243 million pounds for
the year ended April 29, from 273.5 million pounds a year ago,
but met the company's April forecast of 240 million pounds to
245 million pounds.
Revenue fell 1.8 percent to 2.18 billion pounds.
($1 = 0.7649 pounds)
(Reporting by Sangameswaran S and Arathy S Nair in Bengaluru;
Editing by Amrutha Gayathri, Bernard Orr)
((Sangameswaran.S@thomsonreuters.com; within U.K +44 020 7542
1810; outside U.K. +91 80 6749 3544; Reuters Messaging: