Flat beer is not something for a pub group to aspire to, but flat sales is a different matter, given the current difficult economic environment.
Enterprise Inns, which owns 6000 pubs, said full year like-for-like sales fell 1.2% last year, a better performance than the 4.3% decline during the previous twelve months. Profits fell from £157m to £137m, in line with expectations. But with the industry hit by the UK smoking ban, cut price drink sales from supermarket, rising alcohol duty and the general gloomy consumer environment, the company said the first quarter was likely to remain difficult.
With £2.7bn of debt (down from £3bn last year) the company continues to sell unwanted pubs and expects to cut its estate to around 5,200 over the next three years. Chief executive Ted Tuppen, quoted by Reuters, said:
The market continues to be challenging but we are in great shape as a business. We have got flat like-for-likes or even growth very much in our sights for the (2012.13) full year.
The company's shares have edged up 0.25p to 67p, and Simon French at Panmure Gordon said:
Given the improving trading trends and falling debt we think the stock continues to offer significant upside potential. We reiterate our buy recommendation and 87p target price, implying around 30% upside potential.
Jeffrey Harwood at Oriel Securities was also positive:
While the shares have recovered strongly from depressed levels this year, we consider there is further good recovery potential given the improving trend in trading and the very low PE.
