UPDATE 2-Pub operator Fuller's profit rises on higher food sales

Fri Jun 6, 2014 5:18am EDT

(Adds CEO comments, analyst comment, background, share movement)

By Aastha Agnihotri

June 6 (Reuters) - British pub operator and brewer Fuller, Smith & Turner Plc said like-for-like sales at its managed pubs showed robust growth in the year ended March as a recovery in consumer spending boosted food sales at its outlets.

Fuller, which brews ales including the London Pride brand, said like-for-like sales at its managed pubs and hotel division rose 8.3 percent for the 52 weeks to March 29. The division contributes half of the group's profit.

"Food is becoming and is now a critical part of how we run pubs in southern England," Chief Executive Simon Emeny told Reuters.

Fuller's growth was stronger in the second half than in the first half of the year, helped by an improving economy, he said.

British households spent more and companies increased investment at the fastest pace in a year in the first quarter, official data showed last month.

Fuller's full-year adjusted pretax profit rose to 34.1 million pounds ($57.3 million), from 31.1 million pounds a year earlier.

Revenue rose 6 percent to 288 million pounds.

Rival pub firm Young & Co's Brewery posted a 24 percent rise in full-year pretax profit helped by higher consumer spending and increased footfalls.

Profit in Fuller's tenanted division, where the company has been investing in property repairs, grew by 2 percent on a like-for-like basis. Tenanted division pubs are run by individual entrepreneurs, who sell Fuller's brands.

"Sales are benefiting from strong trading conditions in London and the South East," Numis analysts said in a note.

The brokerage reiterated its "add" rating on the stock with a target price of 1,050 pence.

Fuller, which has almost 400 pubs in London and the South East, is pinning hopes on a pleasant UK summer as the bulk of its pubs have beer gardens.

This summer, however, is particularly important for pub operators as it includes the soccer World Cup.

"For us, good weather is important to our performance and in many ways that's probably more important to us than the England's performance in the World Cup," said CEO Emeny.

"Historically England don't tend to do well in the major football tournaments and if they did do well this year, I'm sure that will be an additional boost to the whole economy."

The London-based company, which exports to 68 countries, said it was not planning to open outlets outside of the UK but would continue to expand its export business.

Fuller raised its final dividend to 9.30 pence per share from 8.35 pence.

Shares in the company were up 5.5 percent at 990 pence in thin-volume trade at 900 GMT on the London Stock Exchange. ($1 = 0.5956 British Pounds) (Editing by Gopakumar Warrier)

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