Spirit Pub Company has issued its trading update covering the fourth quarter of the current financial year, reporting that full year results are expected to be ahead of market expectations, with Mike Tye, Chief Executive, commenting:
“We are pleased with our strong performance in the quarter, particularly when compared to the good summer weather last year. Both the Managed estate and the Leased estate have outperformed their respective markets.
“While the market still remains challenging, the strategy we have put in place continues to deliver consistently solid results through investment in our brands, estate, infrastructure and people. We remain confident in the long-term outlook for the business and expect full year results to be ahead of market expectations”.
Douglas Jack at Numis has upgraded forecasts by 3%, with 2014E PBT increasing to £59.0m from £57.4m. This and an acceleration in expansion, which is expected to generate returns materially ahead of the cost of capital, has also led to the upgrading of future years’ PBT by an average of 3%. He commented: “We believe increasing visibility on LFL profit growth, high cash returns, faster expansion and net debt reduction (growing cash reserves) should bring the re-rating the company deserves.”
Managed
| 12 weeks to 16th August 2014 |
52 weeks to 16th August 2014 |
|
| Like-for-like Net Sales | +2.1% | +4.4% |
| Like-for-like Food Sales | +2.0% | +4.1% |
| Like-for-like Drink Sales | +2.3% | +4.5% |
The robust performance of the Managed pubs has continued in the quarter with like-for-like performance remaining ahead of the market. These results are encouraging as they come on top of strong comparatives from last year.
During the quarter to 16th August 2014, 11 acquired pubs were added to the Managed division and will be converted into Spirit brands over the coming weeks. These pubs are expected to generate returns materially ahead of cost of capital.
Leased
| 12 weeks to 16th August 2014 |
52 weeks to 16th August 2014 |
|
| Like-for-like Net Turnover | +1.1% | +2.8% |
| Like-for-like Net Income | +4.8% | +4.2% |
The market-leading performance of the Leased estate, as a result of the continued execution of Spirit’s strategy, has now delivered four consecutive quarters of like-for-like net income growth.