Pub group makes progress with sell off plans

Picture: PA
Picture: PA
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Pub group Punch Taverns ​said profits at its core estate jumped four per cent and it is making progress with plans to close down unprofitable pubs.

The UK’s second biggest landlord, which has​ 3,500 pubs, ​said it expects to report underlying ​earnings of between £193​m and £200​m​ ​in the year to August 22.

This is in line with expectations, but down from £205m last year.

​The group, which trails Britain’s biggest pub company Enterprise Inns, has reduced its debt by £513m to £1.4bn and the value of its estate now stands at £2.1bn.

Last October Punch completed a deal to restructure £2.3​bn of debt, having been saddled with large liabilities after embarking on a major expansion before the financial crisis.

​​Last week the group agreed to sell 158 pubs to property firm

NewRiver Retail for £53.5​m as part of its strategy to dispose of ​unprofitable pubs.

​The sale will leave it with around 2,900 pubs in its core estate and about 550 non-core outlets.

The deal is expected to complete on September 11.

The company said that over the financial year to August 22, disposals reached £89m which was ahead of guidance.​

Punch Taverns chief executive Duncan Garrood said: “The business has ended the year with a solid set of results, in line with our expectations.

“The business has clear plans for further debt reduction and will benefit from being able to focus more resources on the higher quality core pub estate.”

​The core estate is expected to ​produce around 95​ per cent​ of pub earnings in ​the next financial year.

Last year, average earnings per pub was £59,500, but this figure fell to £58,500 after removing the 53rd week.

Analyst Douglas Jack at Numis said: “2015 expected trading and disposals are ahead of our expectations, with core estate like-for-like net income up 0.3 per cent and average profits up four per cent.

“We are upgrading our 2015 pre-tax profit forecast by five per cent to £60m, from £57m.

“We would buy the shares, which we believe are undervalued, with further possible positive catalysts ahead. We are increasing our target price to 180p, from 160p.”

Numis said it won’t upgrade its 2016 predictions due to dilution from the NewRiver Retail disposal.

The broker said Punch will have sold around 210 pubs this year, and it expects the firm to sell a further 300 outlets in the new financial year.

This includes the 158 pubs sold to NewRiver, as this deal is expected to complete on September 11, after its new year begins.

Punch is understood to be in talks to sell its drinks wholesale business Matthew Clark to Conviviality Retail, which is the owner of Bargain Booze and Wine Rack.

Punch said that it will report its full-year results on November 12.