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Morning Briefing for pub, restaurant and food wervice operators

Tue 2nd May 2023 - Update: Greene King delivers strong FY performance, expects 2023 to be another year of significant investment
Greene King delivers strong FY performance, expects 2023 to be another year of significant investment: Brewer and retailer Greene King said it delivered a strong financial performance in 2022 against a challenging consumer and wider macroeconomic backdrop, and that it expects this year to be one of significant investment. Group revenue for the 52 weeks to 1 January 2023 increased 62.2% to £2.176bn, up from £1.342bn, with growth across all of its five divisions. Adjusted operating profit was £192.6m versus £18.6m in the prior period, with statutory operating profit for the year of £249.2m (2021: £63.8m). Pre-tax profit stood at £98.4m versus a £70.4m loss in the year before. The company said that its performance was driven by strategic delivery and business transformation, and that it saw a recovery in sales, including in London, with trade returning to pre-pandemic levels by spring as covid-19 restrictions lifted. However, it said that the cost-of-living crisis meant that customer confidence remained depressed throughout the year. It said that the implementation of “proactive measures” reduced the impact of inflationary pressures and supply chain disruption on the business, including successful energy hedging and focussing on cost efficiencies. It said that capex and business acquisitions of £242.3m (prior period: £144.5m) reflected a period of increased investment across the business. During the period the company said it had successfully refinanced its balance sheet by £915m, and repaid the A5 Spirit debenture and A5 Greene King securitisation bonds to maximise the “strength and flexibility of the balance sheet and maintain the business’s robust capital structure”. Within its Local Pubs division, the company completed 14 core investments in the year to establish the platform for scaled investments across 2023 – in total 105 sites benefited from capital investment in the year. It said: “Despite a challenging period for Destination Food Brands, a further 80 sites benefited from capital investment in the year with a big focus on gardens. A total of 43 sites across our Premium, Urban and Ventures estate were invested in, including seven sites transferred in from other areas of our business to optimise the trading format.” It also grew Hive Pubs, its community pub model operated by franchisees, to 28 sites. The business said the implementation of a step change in its digital capabilities was ongoing, including investing £11.2m in starting to bring higher quality WiFi to all the group’s pubs. The business said it expanded its industry-leading apprenticeship programme with 1,173 additional individuals joining the scheme, which includes offering apprenticeships for prisoners for the first time. It said: “Our team member engagement survey showed ‘sustainable engagement’ increased to 84%, a significant improvement from 79% previously, with a material reduction in employee turnover.” At the same time, it completed the mapping of its carbon footprint and set a near-term target of 50% reduction of greenhouse gas emissions across scopes 1,2 and 3 by 2030 through the Science Based Target Initiative (SBTi). It also publicly committed to a net zero target by 2040. The business said it remains confident in its ability to continue to deliver “outstanding customer experiences through its balanced portfolio of compelling, profitable brands”. It said: “We expect 2023 to be another year of significant investment focused on the continued optimisation of the core estate, improving digital capability, operational efficiency, and further progress in delivering our environmental and social commitments. Whilst early in the year our capital investment programme remains on track. We remain mindful of the significant cost pressures impacting both consumers and our business and we expect the tough environment to persist through the year.” Nick Mackenzie, Greene King chief executive, said: “Greene King delivered a strong operational and financial performance during 2022 despite the challenging macroeconomic backdrop with progress made in all our businesses. This was only made possible by our hardworking and committed team members and tenants, who I would like to thank. We also continued to invest in the business, which meant we made important strategic progress, particularly in new format and brand developments, targeted acquisitions and through driving our cultural transformation. Looking ahead, we expect the tough backdrop to continue, and we have planned for this. We now have a stronger platform to deliver sustainable growth against a strategy that is working and with a strong balance sheet. By focusing on the things we can control and supporting our team members and customers, we will continue to do what Greene King does so well, playing a meaningful role in supporting the communities we serve and leading the way in making our industry a better place to work.”

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