Greene King interim profits rise 17 pct, LFL food sales up 8.5 pct

U.K. pub owner Greene King Plc reported a 17 percent rise in interim pretax profits, driven by strong like-for-like (LFL) sales growth at its Retail division.

Retail LFL sales grew 3.8 percent in the half-year, following 4.6 percent growth last year. LFL food sales rose 8.5 percent.

In the 30 weeks to Nov. 28, Greene King Retail LFL sales were up 3.7 percent.

The brewer of Old Speckled Hen ale, which lifted its interim dividend by 6.8 percent to 6.3 pence, said current trading remains strong, with Christmas bookings comfortably ahead of last year.

We expect a strong Christmas based on an encouraging level of bookings....however, the broader trading outlook for 2011 remains uncertain; our industry will be challenged by a VAT rise in January, a further significant rise in duty in April and the impact of government spending cuts, chief executive Rooney Anand said.

Ahead of the interim results, Keith Bowman, analyst at Hargreaves Lansdown, said: Food sales are likely to remain an important driver. Furthermore, management's push to increase the proportion of managed pubs whilst reducing the tenanted division may prove a feature once again. Market consensus opinion currently denotes a buy.

Greene King's half-year results come a day after peer Marston’s said it has made a strong start to the new financial year even as it reported a rise in profits for the 52 weeks ended Oct. 2.

For the 24 weeks ended Oct. 17, Greene King's pretax profit was 60 million pounds, up from 51.2 million pounds last year. Revenue rose 4.2 percent to 484.1 million pounds ($755.9 million), driven by strong growth in Retail and Belhaven divisions.

In its September update, Greene King reported a rise in LFL sales of 4.6 percent, with food sales up 8.6 per cent. The group's pubs and restaurants accounted for around 70 percent of its revenues.

The company said on Friday it plans to combine its Brewing Company division and Belhaven Brewing, its Scottish division, into one business, Greene King Brewing and Brands.

The changes, which will take effect from January 2011, will deliver an additional 1 million-pound of annualised cost savings from the next financial year.

Founded in 1799, Greene King operates 2,452 pubs and restaurants across England, Wales and Scotland, of which 891 are retail pubs and restaurants and 1,561 are tenanted or leased pubs.

Shares of Greene King, a FTSE 250 constituent, ended Thursday's trading at 460 pence on the London Stock Exchange, 4.96 percent below its 52-week high of 484.00, set on April 26.