Greene King shares jumped by over 11 per cent this morning after the brewer and pub operator said the World Cup and warm weather boosted sales over the summer.
The Suffolk-based company, which owns the Chef and Brewer and Hungry Horse pubs, saw a 2.8 per cent increase in like-for-like sales in the 18 weeks to September 2.
It said it sold 3.7million pints of beer in total during England’s seven World Cup matches, with like-for-like sales up 61 per cent on the day of the semi-final.
Greene King shares rose 11 per cent to 527.64p in morning trading.
Cheers: Greene King sold 3.7m pints of beer in total during England’s World Cup matches
Greene King’s branded local pubs traded particularly well, with comparable sales up 5.5 per cent. But like-for-like sales at its pub partners unit fell 0.4 per cent due to ‘cost pressures’.
However the company said this should be balanced out by the end of the year as its ‘cost mitigation programme’ to help offset cost inflation of £45million to £50million remains on track.
It also said is making good progress with a refinancing programme, which will reduce the cost of debt, and that it remains on course to dispose of 100-110 pubs this year and to open around nine new outlets.
It comes as Greene King, which also owns ale brands including Greene King IPA, Old Speckled Hen and Abbot Ale, has been battling rising costs from the government’s minimum living wage increase, higher property prices and a Brexit-induced slump in the pound.
‘This strong performance was underpinned by the ongoing benefits from our sales driving investment to further improve our value, service and quality, and boosted by the weather and a successful World Cup,’ Greene King said in a statement.
Pints of were drunk at an increased rate in the summer thanks in large part to England’s World Cup games.
Russ Mould, investment director at AJ Bell, said today’s share price rise was a proof that consensus had been wrong.
‘On first take, nothing in its statement should really have been a surprise. Sales have been boosted by the hot summer weather and England doing well in the World Cup. These were obvious catalysts which should have already been priced in by the market.
‘But in the case of Greene King, the market has clearly been worried about other issues, hence why its share price had been in a falling trend throughout the summer (up until today).
‘Many analysts have been bearish on the stock and reduced earnings expectations earlier this year, expressing concerns about trading health and whether it would generate enough free cash flow to pay for the much-prized dividend.
He added: ‘Greene King has finally managed to grab the market’s attention after a long period in the doldrums. Its real test is to prove that positive trading momentum can be sustained, otherwise we’ll be back to the old days of a limp share price and investors preferring to park their money in premium-end operators such as Fuller’s and Young’s.’