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UPDATE 1-British pub operator Greene King sees challenges ahead
November 30, 2016 / 9:50 AM / in a year

UPDATE 1-British pub operator Greene King sees challenges ahead

(Updates shares, adds company comment, analyst comment)

Nov 30 (Reuters) - Pub operator Greene King Plc forecast a challenging consumer environment going forward, partly due to increasing levels of consumer uncertainty and further cost pressures from a hike in British minimum wages.

Green King shares were down 1.6 percent to 700.4 pence at 0908 GMT on the London Stock Exchange.

The company, which brews ales such as Old Speckled Hen, said it expected government initiatives like the national living wage, minimum wage, apprenticeship levy and proposed increases in business rates would increase cost pressure in the hospitality industry.

The changes would inflate costs going forward, Greene King said, adding that it was working with trade organisations to offset the impact.

However, the company's acquisition of Spirit for almost 774 million pounds in 2014 gave it synergy to "offset most if not all of those costs" Rooney Anand, chief executive of the company told Reuters.

Analysts at Citi wrote in a note to clients that they had cut earnings per share estimate for full year 2018 by 2 percent to 71.8 pence, citing “incremental cost headwinds from business rates and utilities,” and said it expected low- to mid-single digit declines in consensus forecasts for 2018.

The Suffolk-based brewer said revenue for the 24 weeks to Oct. 16 rose 13.8 percent to 1.04 billion pounds ($1.30 billion) and adjusted pretax profit stood at 139 million pounds.

$1 = 0.8019 pounds Reporting by Rahul B in Bengaluru; Editing by Sunil Nair

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