Profits surge cheers Greene King

The group, which has over 120 pubs in Yorkshire, said sales at its pubs and restaurants rose 4.2 per cent to 484.1m in the 24 weeks to mid-October.

Pre-tax profits surged 17 per cent to 73.1m, ahead of forecasts.

Greene King said it is confident of delivering strong results for the full year. It added that current trading is strong with Christmas bookings comfortably ahead of last year.

The group said it has made "significant investment" in its Yorkshire pub estate over the past year and 15 local pubs in the region have undergone refurbishments in the past 12 months

Greene King's Pub of the Year for Food 2010 was the Lendall Cellars in York, which received the award for outstanding service, value and quality.

Chief executive Rooney Anand said: "Although we expect more challenging conditions in 2011, we are confident that we will continue to trade well and deliver strong financial results."

Greene King, whose chains include Hungry Horse, Old English Inns and Loch Fyne Restaurants, has focused on value and higher margin food sales since 2008 helping it outperform competitors who have struggled in torrid trading conditions.

Britain's two biggest pubs companies, Punch Taverns and Enterprise Inns, reported declining sales over the same period.

Greene King's like-for-like sales for pubs open more than a year grew by 3.8 per cent, with food sales rising by 8.5 per cent.

Food now accounts for 39 per cent of total sales, up two percentage points on last year.

The change of focus helped the company lift operating margin at its retail division by 80 basis points to 19.5 per cent.

Finance director Ian Bull said he expects pre-tax profit forecasts for the full year to rise by between one and two percentage points. The average pre-tax forecast had stood at 135m.

Greene King is paying a dividend of 6.3p, up 6.8 per cent on the year before, marking it out from rivals Punch Taverns, Enterprise Inns and Mitchells & Butlers who have scrapped dividends in favour of paying down debt.

Deutsche Bank analyst Geof Collyer said: "The market should respond positively to the increase in the dividend as Greene King is the only major pub group to maintain and grow its dividend through recession."

Shares in Greene King, which have gained in value by nearly a quarter in the last six months, rose 1.4 per cent last night to close up 6.4p at 466.4p. Analysts at KBC Peel Hunt upgraded their 2011 pre-tax profit forecast by two per cent to 137m and reiterated their 'Buy' recommendation.

Greene King revealed plans in July to expand its retail business – its managed pubs – and reduce its tenanted sites over the next three to five years.

The company said it remains on track to hit its targets.

Greene King also announced plans to fully integrate its Scottish business Belhaven in a bid to save the company 1m.

The group said it will combine its brewing company and pubs, which include managed and leased properties, with Belhaven to speed up its growth strategy.

Greene King Brewing Company and Belhaven Brewing will be combined into one business – Greene King Brewing and Brands, under the leadership of Euan Venters, the current managing director of Belhaven.

Greene King will integrate 106 Belhaven managed pubs into Greene King retail.

The company reported strong sales growth at its Hungry Horse chain – up 10 per cent on a like-for-like basis although the Loch Fyne restaurant chain was slightly down in the period.

Rival pub company Marston's reported a 4.6 per cent rise in profits to 73.5m on Thursday as it reaped the benefit of its plan to focus on "food, families, females and forty/fifty-somethings".

The Pitcher & Piano and Tavern Table operator, which runs around 2,000 pubs, said food now accounts for 40 per cent of sales.

Ale and hearty for two centuries

Greene King brews a number of well-known traditional ale brands such as Greene King IPA, Abbot Ale, Old Speckled Hen and Ruddles County.

The company has been running its pubs division and brewing operation for over 200 years.

Through a series of acquisitions, Greene King has grown steadily into a leading pub retailer and brewer. The group's managed house division, known as Pub Company, encompasses both the Old English Inns and Hungry Horse chains.

It is now the third-fastest-growing managed pub business in the UK. The Pub Partners arm is involved with the running of Greene King's tenanted and leased pubs.