Punch Taverns loving the summer as profits set to beat expectations

Punch Taverns said like-for-like sales in the division grew 2.6 per cent in the fourth quarter to the end of August, an improvement which helped reduce the decline for the financial year as a whole to 2 per cent.

As well as favourable weather in June and July and the positive impact of the World Cup, Punch said the estate benefited from increased investment and the roll-out of more food-led sites such as Fayre & Square and Chef & Brewer.

Formerly known as Spirit Group, the managed business refurbished around a quarter of its 800-strong pub estate during the financial year. Fourth quarter sales improved in the leased and tenanted division, which features more than 6,300 pubs, although like-for-like profits will be down by around 10 per cent to 11 per cent in the year due to an ongoing squeeze on drinks margins.

Pub failures in the estate have halved and financial support to tenants has stabilised at just under 2m a month, the company added.

Across the group, Punch said underlying earnings are now likely to be marginally ahead of previous expectations.

Panmure Gordon stockbrokers raised its full-year profits forecast to 131.5m from 128.2m as a result of the upgrade.

Punch said it was encouraged by the current trading momentum but added the near term trading outlook remained uncertain, particularly given the potential impact of the June budget on consumer spending next year.

It has already warned the VAT hike to 20 per cent in January "will put further unnecessary pressure on the pub trade". It added yesterday: "Against this backdrop, we believe it is sensible to plan cautiously and we have pre-pared our financial plans accordingly."

Punch, which has generated proceeds of around 300m from the sale of non-core pubs, said net debt reduced over the financial year by 684m to 3.1bn.