Punch Taverns considers more pub disposals

It has identified a portfolio of 4,700 outlets which have a long-term future, having already disposed of 893 pubs in the financial year to August.

Punch reported underlying profits of 131m for the period, down from 160m a year earlier, but slumped 160m into the red at the bottom-line due to balance sheet write-downs on the value of its non-core pubs.

The final quarter of the period showed an improved trading performance, a trend which has continued into the first seven weeks of the new financial year.

In the managed estate, which includes the food-led sites Chef & Brewer and Fayre & Square, like-for-like sales were up 2.6 per cent in the final quarter and helped to reduce the decline for the whole financial year to 2 per cent.

However, Punch said it would continue to take a cautious view of trading prospects and prepare its financial plans accordingly.

New chief executive Ian Dyson, who joined the company in September from Marks & Spencer, has also started a review of strategy and operating performance in order to explore options for creating shareholder value.

He added: "While we have been encouraged by more recent trends in both the leased and managed businesses, the economic environment is very difficult and there remains room for improvement across all aspects of our business."

In those leased pubs considered core to the Punch business, underlying earnings declined by 9 per cent in the year due to lower beer volumes and reduced rental settlements. However, this figure widened to 28% among non-core pubs.

Punch added: "Whilst we remain committed to the future of the British pub, we believe that fundamental change in consumer habits will result in some pubs not surviving. We have identified a core estate of around 4,700 pubs which have a long term, sustainable future.

"The remainder of the estate where we believe long term viability is compromised will ultimately be disposed of, representing around 1,300 pubs at the year end."