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Thu 25th Jul 2019 - Update: Fuller’s, NewRiver and Diageo
Fuller’s ready to capitalise on growth opportunities after £250m brewery sale: Fuller’s has reported it is ready to ‘capitalise on attractive and profitable growth opportunities’ after selling its brewery to Asahi for £250m. revenue up 7% to £431.3 in the 52 weeks ended 30 March. Ebitda was up 3% to £73.2m. Managed pubs and hotels reported like-for-like sales growth of 4.9% (2018: +2.9%) whilst tenanted saw like-for-like profits up 1% (2018: +3%). Total beer and cider volumes remained level (2018: -1%). It acquired 11 new sites including six Bel & The Dragon country inns across the Home Counties and a package of four bars in the City. The Signal Box opened at Euston Station adding to its portfolio of pubs in transport hubs. It added a further 93 bedrooms to its estate including 15 at The Counting House on Cornhill. In the most recent 16 weeks since the year-end, managed pubs and hotels like-for-like sales rose 1.2% and total sales increased 2.3%. Tenanted Inns like-for-like profits were down 3% for first 16 weeks. Chief executive Simon Emeny said: “It would be impossible to review the last financial year without mentioning the sale, post year end, of the Fuller’s Beer Business – a transformational move that has changed the face of our company. Fuller’s has always taken decisions for the very long term and this sale was no exception. It gives us an even clearer focus on sustainable growth from the higher margin part of our business and has the added advantage of putting us in a strong position to deal with potentially turbulent times ahead as the UK navigates the implications of exiting the European Union. Underpinning this position is a premium pubs and hotels business in robust health. We have had another year of like for like growth that has outperformed the industry, while our successful tenanted business has continued to build on the new turnover agreement that creates genuine, sustainable partnerships between our tenants and ourselves. Against some incredibly tough comparatives from the hot weather and football fervour of summer 2018, I am pleased to report steady trading for the first 16 weeks of the new financial year with like for like sales in our managed pubs and hotels rising by 1.2% and total revenue rising by 2.3%. Like-for-like profits in our Tenanted Inns were down -3% against very tough comparatives. This is a transformational period for Fuller, Smith & Turner, which coincides with a great deal of political and economic uncertainty. However, we can see a clear way ahead for the company. With an exceptionally strong balance sheet, a predominantly freehold estate and a proven long-term business model, there will be undoubted opportunities and we are perfectly poised to leverage those over time as we embark on the next phase in our history.” Chairman Michael Turner added: “A large proportion of management time and effort in recent months has revolved around the transaction, announced in January, to sell the Fuller’s Beer Business to Asahi Europe Ltd for an enterprise value of £250 million. Over the years, we have brewed, marketed and sold fantastic beers including London Pride – which was the brand leader in premium ale. However, to really compete on a worldwide stage and take these beers to the next level, they need the ownership of a global brewing giant and I’m excited to see the heady heights to which Asahi can take a beer such as London Pride. The proceeds generated from the sale will, in time, be reinvested in a focused manner to grow our pubs and hotels business. This is the dawn of a very exciting new era for your company. The decision to sell was not an easy one but it is the right one. While the brewery has historically been an integral part of our heritage and culture, the majority of our profit has derived from Fuller’s Inns for many years now. I know that Simon Emeny and his team will be looking to retain that special culture as we move forward, and there is no doubt that this financial year is going to be a transformational one for the business as Fuller, Smith & Turner embarks on a new chapter.”

NewRiver reports its 661 pubs delivered a 5.5% rise in Ebitda per pub in its First Quarter: NewRiver has reported that its 661-strong community pub portfolio continues to deliver robust cash flows and opportunities to extract further value. It delivered like-for-like Ebitda per pub of +5.5% in first quarter, driven by the scale-based synergies secured in FY19. Occupancy remained high at 97.6% (March 2019: 97.9%) across the estate. It reported it is extracting further value through risk-controlled development: on site with the redevelopment of the Sea View Inn in Poole, Dorset to deliver a scheme comprising ten apartments and a Co-op convenience store (‘c-store’). Chief executive Allan Lockhart said: “We have made a good start to the year despite continued retail sector headwinds, delivering robust operational metrics, with occupancy and average rents remaining stable, footfall outperforming the benchmark, and long-term leasing deals ahead of previous passing rent and estimated rental values. We have progressed our strategies to deliver underlying funds from operations growth and to re-establish a fully covered dividend with a net neutral investment approach, recycling £27.5 million of lower-yielding assets and acquiring £30.3 million of high-yielding retail parks, with robust cashflows, in a new joint venture with BRAVO. We signed our third mandate within a year to our third-party asset-management platform, for the Nicholsons Shopping Centre in Maidenhead, which is a significant endorsement of our in-house capabilities and demonstrates the attractiveness of our scale, governance and asset management expertise to a wide range of third-party asset owners. Our pub portfolio has also continued to deliver high occupancy and robust cash returns, as it benefited from its first full quarter of the scale-based synergies secured through the integration of Hawthorn Leisure, completed in January 2019. Looking ahead, we remain confident that our diversified portfolio, underpinned by affordable and therefore sustainable rents, and a focus on convenience, value and services, alongside our identified growth strategies, will position us well to weather the current challenges and pursue value-creating opportunities.”

Diageo report full-year sales near £13bn: Diageo has reported sales grew 5.8% to £12.9bn in the year ended 30 June 2019. Operating profit was up 9.5% to £4bn. Chief executive Ivan Menezes said: “Diageo has delivered another year of strong performance. Organic volume and net sales growth was broad based across regions and categories, with new product innovation being a strong contributor. We expanded organic operating margin ahead of our guidance and increased investment behind our brands ahead of organic net sales growth. Fiscal 19 has been another year of strong free cash flow delivery at £2.6 billion and we have returned £2.8 billion to shareholders via share buybacks. The board has approved plans for an additional return to shareholders of up to £4.5 billion over Fiscal 20 to Fiscal 22. Our focus on quality sustainable growth is backed by a culture of everyday efficiency that enables us to invest smartly in marketing and growth initiatives while expanding margins. These results reflect the steady progress we are making and as we look ahead we see attractive opportunities to deliver consistent growth and create shareholder value. In the medium term I expect Diageo to maintain organic net sales growth in the mid-single digit range and to grow organic operating profit ahead of net sales in the range of 5% to 7%.” 

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