UK brewer and pub operator Fuller, Smith & Turner has reported a one per cent increase in pre-tax profits to £43.2million despite challenging market conditions that left beer and cider volumes flat.
The group posted a three per cent rise in full-year revenues to £403.6m while underlying earnings rose just one per cent to £70.9m.
The company, which specialises in food and premium drinks, was boosted by a strong performance from its tenanted inns with sales up three per cent and good growth at its managed pubs and hotels where sales grew 5.2 per cent.
Added fizz: UK brewer and pub operator Fuller, Smith & Turner has reported a 1% increase in pre-tax profits to £43.2m despite challenging market conditions
However, its total beer and cider volumes were down three per cent over the first nine weeks of the new financial year in what it called a ‘challenging marketplace’.
Fuller’s also invested in a new pilot brewery, which it hopes will boost innovation across its brewing team and showcase its Chiswick brewing hub.
Chairman Michael Turner added that its recent acquisition of Dark Star Brewing, a craft cask brewer in Sussex, would also help to further broaden the group’s appeal.
He said: ‘It has been another tough year in the beer industry, but the Fuller’s Beer Company has solid plans in place.’
Chief executive Simon Emeny said: ‘Our managed pubs and hotels have again delivered like for like sales that are above the industry average and our tenanted Inns are making real progress with a three per cent increase in profits.
‘Although we have seen a marginal drop in total beer and cider volumes, it has been a year of progress for the Fuller’s Beer Company, which has a clear strategy to return to growth and exciting, achievable plans in place.
‘While we are still in a time of national and global uncertainty – and we do not underestimate the related wider market and economic issues that we will have to navigate over the months ahead – we believe we are in a strong position.’
Profits grew despite a ‘huge’ rise in business rates, as well as higher labour costs and ‘imported inflation due to a weaker pound’, the company said.
In line with many high street retailers, pub companies have endured a tough start to the year, and several blamed cold weather in March and low consumer confidence for lower than expected sales.
Falling flat: Fuller’s total beer and cider volumes were down three per cent over the first nine weeks of the new financial year in what it called a ‘challenging marketplace’
In May, rating agency Fitch said the UK pub sector was ‘highly exposed’ to rising labour and food costs and to changes in consumer confidence on the back of inflation and the Brexit-hit pound, but said that it expected the World Cup to boost sales this summer.
‘Fuller’s has a great estate and London has been strong,’ said Mark Brumby, analyst at Langton Capital.
‘There may, therefore, be just a tinge of disappointment for some in today’s comments.
‘In recent trading, despite the sunshine, Fuller’s, admittedly against strong comparatives, is not ahead of inflation in its managed or tenanted inns and beer sales are down.’
However, ‘the group does remain relatively well positioned,’ he added.
Brewing hub: Fuller’s also invested in a new pilot brewery, which it hopes will boost innovation across its brewing team and showcase its Chiswick brewing hub
The company’s headline figures were in line with expectations from analysts at Peel Hunt, who predicted pre-tax profits of £43.1m in May.
However, like-for-like sales growth in Fuller’s managed pubs division fell short.
Peel Hunt had said that Fuller’s needed growth of four per cent in this category in order to maintain margins and to offset the higher costs associated with operating predominantly in London, such as a 26 per cent increase in business rates.
The London-based brewer, which was founded in 1845, also reported a 2.5 per cent rise in sales in its managed pubs division for the first nine weeks of the current financial year.
Shares in the company have risen six per cent so far this year, reversing the previous year’s six per cent slump.
The company’s share price was down 2.16 per cent at 949p in early trading today.