Fuller’s Lifts Half-Year Profit by a Quarter and Signals Full-Year Results Ahead of Expectations

Fuller, Smith & Turner has reported a 25% increase in half-year adjusted pre-tax profit and told investors it now expects its full-year performance to exceed market forecasts. Shares in the London-based pub and hotel operator moved higher in early trading.

For the 26 weeks to 26 September, adjusted profit before tax, which strips out one-off items, reached £28.2m, compared with £22.5m in the same period last year. Revenue grew 6.5% to £220.9m, while adjusted earnings per share climbed 33% to 39.81p. The board raised the interim dividend by 6% to 8.35p.

Fuller’s said it now anticipates full-year adjusted pre-tax profit will come in above the current consensus of analyst forecasts, though it did not put a figure on the expected outperformance.

Like-for-like sales, which compare only sites trading in both periods, are up 5.8% over the first 32 weeks of the year. Advance bookings for the Christmas trading period are 16% ahead of the same point last year.

The company acknowledged that part of the half-year gain came from conditions unlikely to be repeated. Management estimates that the exceptional summer weather and the football World Cup together contributed between £2m and £3m of profit.

During the period, Fuller’s acquired 12 pubs for £37.5m. Net debt excluding lease liabilities, which measures borrowings less cash, stood at £140.2m, marginally up from £138.3m a year earlier. The group expects the figure to rise to between £190m and £195m by the year-end.

Fuller’s Julie Palmer, Managing Partner at financial and real estate advisory group BTG, said: “Off the back of a budget that offered small relief in business rates for the hospitality industry, there will now be many that either have been given a clearer path or a clearer cliff edge ahead. The smaller players in the industry will be hoping that Christmas can deliver a short-term boost to revenue as they survive day to day. The larger players will be understanding how long-term measures can help drive margins. Either way, this could mean that staff either lower their hours or lose their jobs.

“Fuller’s will be one of those looking long-term. Its identity of delivering mid price dining with a cosier, more traditional pub experience is well defined and this has helped build a loyal customer base. Meanwhile, its scale and operational size have allowed it to negotiate with suppliers and make savings to increase margins where possible. As a big player it is tasting success in this market by showing how incremental gains – whether saving costs or improving delivery – compound quickly to form a foundation of success.

“With the busy Christmas period showing bookings ahead of last year, Fuller’s will be hoping it can repeat last year’s record-breaking revenues. The risk is that last year becomes an outlier in what has been a steady run of results. However, with the solid foundations in place it is well placed to take advantage should the British public rally to defy the gloom by choosing to spend at the pub once again.”