Punch earnings ‘marginally ahead' of expectations

24 August 2010
Punch earnings ‘marginally ahead' of expectations

Punch Taverns expects earnings before tax and exceptional items for the full year to 6 July 2010 to be "marginally ahead" of its expectations.

The company said it had benefitted from improved operating standards, increased pub refurbishments and good summer weather.

Its leased and tenanted division, Punch Partnerships, saw failure rates halved as the percentage of pubs on substantive agreements rose to 86% and financial support to licensees stabilised at around £2m a month. Despite that, profits remained under pressure owing to lower drinks margins and a reduction in rental income from returned pubs, meaning that like-for-like profit would be "broadly in line" with the rate reported in the first half of the year.

The pubco's managed division saw like-for-like sales in the 52-week period drop 2% below last year. Despite that, Punch said trading improved in the second half of the year, and particularly in the final quarter where like-for-like sales were up 2.6%. Operating margins are expected to be broadly in line with last year.

Meanwhile, the company's disposal programme of "non-core" pubs has generated £300m at an average multiple of 16 times EBITDA. Net debt at the year end stood at £3.1b.

Punch said it expected trading in the near term to continue to be uncertain, particularly given the potential impact of the June budget on consumer spending into next year.

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By Neil Gerrard

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