Fuller, Smith & Turner H1 profits dip on pre-Christmas investment

Fuller, Smith & Turner reported a rise in first-half revenue but a dip in profits as it invested in its estate ahead of the busy Christmas period.

In the 26 weeks to 29 September, revenue pushed up 6% to £222.1m, earnings before interest, taxes, depreciation and amortisation increased 2% to £38.2m and the company lifted its interim dividend by 3% to 7.80p a share. However, adjusted pre-tax profit slipped 1% to £23.6m as it took a hit from its pre-Christmas investment programme.

Chief executive Simon Emeny explained that the profit drop should be "taken in context".

"We made a conscious decision to front-load our investment programme - impacting our profitability by £0.9 million. Although we would have seen profit increase had we not taken this action, we believe this is the right decision and ensures our estate is in the best possible position to benefit from the busy Christmas period and beyond," he said.

The pub group said it saw a good performance from managed pubs and hotels in the first half, with like-for-like sales up 4.1% versus a 3.6% rise in the same period a year ago. Meanwhile, LFL profit from Tenanted Ins was 4% higher, up from a 3% increase the year before.

Current trading was encouraging, with LFL sales at managed pubs and hotels up 4.4% in the first 33 weeks of the year and Tenanted Inns profits 2% higher.

As far as Brexit is concerned, Emeny said Fuller's "balanced" business model is flexible enough to adapt to changing trends and markets.

"With a first-class team of people, a well-invested pub estate and a portfolio of outstanding brands, we are ready and able to face the future," he said.

Paul Hickman, analyst at Edison Investment Research, said: "Whatever outcomes political uncertainties may bring, the London and South Eastern economy is likely to remain relatively strong, and this is the underlying appeal of Fuller’s shares as an investment.

"An able and experienced management team take a long-term view of shareholder value and have been successful custodians of their pub assets and shareholders’ investments over an extended period. The shares are historically cheap at an FY19 P/E of 14.5 times."

At 1010 GMT, the shares were up 0.3% to 936.48p.