Fuller, Smith & Turner has reported a 10% jump in half-year profits despite facing “unprecedented” cost and economic pressures, but warned that political uncertainties in the UK could still hit the business.
The pubs group said pre-tax profit rose to £23.6 million in the 26 weeks to September 30 from £21.4 million a year earlier, while revenues for the period rose 6% £209.3 million.
It was helped by a strong performance from its managed pubs and hotels, which “outperformed” the market with a 3.6% rise in like-for-like sales, while like-for-like accommodation sales jumped 8.2%.
But total beer and cider volumes at The Fuller’s Beer Company rose just 1% against a “flat UK market”.
Chief executive Simon Emeny said the company experienced “some unprecedented influences on the business, not only in our particular industry, but in the context of the wider UK economy and global political scene”.
“I cannot remember a time when we have faced such an array of additional cost pressures,” he said, citing a 26% rise in business rates for its managed pubs, as well as hikes to the apprenticeship levy and national living wage rates.
Like a number of industry peers, Fuller Smith & Turner is keeping a close eye on the effects of Brexit-related uncertainties.
“Although we have already faced and absorbed a number of prevailing headwinds, future economic and political uncertainty may still cause further challenges,” Mr Emeny said.
“However, we are well-placed to face these,” he added, saying the company has a “clear strategy” and was committed to ongoing investments in the business.
Those investments have been aimed at its estate, central IT and back office operations, as well as rebranding and marketing of its London Pride brew.
As part of a strategic review of its tenanted inns, the company has sold a further 12 pubs, and put the remaining four of the 20 earmarked for disposal on the market.
Underlying earnings per remaining tenanted pub is up 7% and total profit for tenanted inns has risen 2% to £6.7 million “despite having a smaller estate”, the group highlighted.
Its brewery division eked out 1% growth amid a “tough and highly competitive” market.
Investments have been poured into the Fuller’s Beer Company, though, to boost efficiency as margins come under “increasing pressure”.
Shares in the pub group were up nearly half a per cent or 4.5p at 969.5p in morning trading.
A number of industry peers have been working to offset rising costs on the back of surging inflation linked to the Brexit-hit pound, and are eyeing a potential drop in consumer confidence that could impact the industry.
Earlier this week, Mitchells & Butlers spooked investors by warning it could scrap its interim dividend amid growing uncertainty, and rival chain Young’s said it was concerned that Brexit uncertainty was making it more difficult to attract and retain staff.
Pubs are expected to suffer if access to foreign workers is restricted as a result of Brexit, with the British Hospitality Association saying earlier this autumn that around 700,000 of the hospitality sector’s 3.2 million workforce are from the EU.