Greene King swept up Spirit Pub Company in a £774m takeover back in July, bringing its total estate to 3,116 pubs - making it the largest managed pub group in the UK. The company's bosses will be toasting the move today, having just posted a 46.9% rise in first half pre-tax profits to £121.3m.
Excluding the growth of Spirit, the company’s pre-tax profits increased by 5.9% from £82.6m to £87.5m – compared with 3% growth in the same period last year. Its CEO Rooney Anand said it had been ‘a strong first half’ with the its core business strengthening and ‘significant progress’ made in the Spirit integration. ‘Like-for-like sales growth in Greene King Retail improved during the half and both Pub Partners and Brewing & Brands delivered profit growth and margin expansion,’ he added.
The outlook remains tough for a number of the UK’s pubs though, as the introduction of the new 'National Living Wage', announced in July and the cutting of the beer tie coming into effect next year (cause for many tenants to be clinking their glasses together, less welcome news for some pub companies), look set to take their toll on an already precarious industry.
In August Punch Taverns announced it was selling 158 sites to shopping centre owner NewRiver Retail and JD Wetherspoon followed suit by selling off 34 pubs nationwide. Founder Tim Martin warned that the national living wage would not bode well for the plight of UK pubs.
‘It is especially in the less-affluent areas where the price differential between pubs and supermarkets have widened,' he said. 'My real point is that this has been taken out of the economic arena and put into the political arena where politicians do things for populist reasons and perhaps short-term ones.'
Moving into food sales to compete for market share has worked for some pubs and Anand is bullish about Greene King’s future prospects. ‘We believe we have the best portfolio of retail pub brands, the best pub assets and the most talented team which, when combined with the strong contribution from synergies and the benefits of our enlarged scale, will ensure will continue delivering value to our customers and our shareholders.’ His view might take a bitter turn come April 2016.