E-Malt.com News article: 1882

Britain's biggest regional brewer, Wolverhampton & Dudley Breweries Plc, said on December 03 it was on the hunt for more pubs after a hot summer boosted trading across its estate, flush with many outdoor beer gardens, according to Reuters report. The brewer of Pedigree, Banks's and Mansfield beers and owner of just over 1,600 pubs reported a small dip in annual profit, but set out its future growth strategy to add a small number of pubs each year in central and southern England. "We have an organic strategy that works and if we can complement that with acquisitions, then fine," said Chief Executive Ralph Findlay in an interview after the results. He said W&D hoped to buy or develop 20 new managed pubs a year to add to its existing 477 outlets, refurbish around 40 existing managed pubs and bring around 30 new tenanted pubs into its estate of 1,131 outlets.

The company said underlying pre-tax profit slipped 1.2 % to 73.1 million pounds ($125.6 million) for the year to September 27, in line with analyst forecasts of 72-73.4 million, with the dip largely due to previous pub disposals and a higher interest charge after the company bought back shares. W&D, which narrowly defeated a hostile bid from Pubmaster in 2001, reported encouraging sales trends from its pubs and gave an upbeat message for the current year, with like-for-like sales still ahead as it hoped to maintain improved profit margins. Analysts said that, although earnings per share growth of 10.1% had come from share buy-backs, W&D had performed well in a competitive and mature pub industry.

"Clearly, they need to continue to buy back shares or buy something, but they are dealing admirably well in a tough trading environment," said analyst Grey Feehely at Altium Capital, who raised his rating on the shares to an "add" from "hold" and his price target to 800p from 750p. The company said like-for-like sales at its managed pubs in the first eight weeks of its new financial year to November 22 rose 3.1 percent, compared to a 3.6 percent rise in the reported year. Uninvested sales in both periods were up 0.1 percent while many pub chain owners are still seeing negative numbers.

Findlay said that, despite increased costs from legislation raising wages, taxes, pensions and changing licensing laws, the operating margin had grown to 22.1 percent from 21.6 percent and he hoped to hold to that level for the current year. W&D's shares were unchanged at 751 pence in early trading. They have outperformed the FTSE 100 index by 80 percent since fighting off the hostile 513p a share bid from Pubmaster in August 2001 and by 15 percent so far this year. The group has returned 138 million pounds to shareholders since the Pubmaster bid, but has remained flexible over whether to return the full 200 million pounds promised as part of the bid defence or turn to buying up selected pubs. The annual dividend rose 10.1 % to 32.1p a share.


08 December, 2003