Fuller’s issues warning after Asahi sale brews unexpected costs

Pub group Fuller’s has warned that unexpected costs associated with the sale of its brewing arm to Asahi will hit full-year profits.

It described 2019 as an “unprecedented year of change” due to the disposal of its brewing business to Asahi in January 2019.

A trading update for the 32 weeks to 9 November 2019 reported like-for-like sales growth of 2.3%, but warned: “Whilst it was not underestimated that this would be a period of significant transition for the business, the costs associated with carrying the central overhead previously allocated to the beer company have transpired to be materially higher than expected, with additional resource required to assist the business through this complex separation period.”

The group anticipates that the overhead costs will continue until a transition agreement concludes in May 2020, when the company will transfer to a structure “more appropriate for a focused premium pubs and hotels business”.

As a result the company has said it anticipated pre-tax profits for the financial year to be in the region of £31m.

Chief executive Simon Emeny said: "This is a transitional year for the company following the sale of the brewing business and subsequent separation of a highly integrated business.

“There have been many moving parts to navigate and we have incurred some greater than anticipated costs as a result which have had a short term impact on our financial performance. Whilst we are taking the action to address these, the impact of this will not be felt in the current financial year.

"Trading is good in light of exceptionally strong comparatives last year and the continued challenge of cost inflation facing our sector. Our strategy remains on track and we will continue to execute our growth ambitions and maximise the opportunities open to us as a focused pubs and hotel business."