UK pub group Fuller Smith & Turner (FSTA) reported like-for-like sales growth of 4.9% from its managed pubs and hotels estate for the year to 31 March 2019.
This implies 5.7% growth over the last 10 weeks. It makes a pleasant change from a hospitality industry leaking growth lately as operators blame tough comparatives from last year, and this summer's relatively slow and damp beginnings.
Investors seem somewhat relievied, bidding the share price nearly 3% higher to £10.95.
A YEAR OF TRANSFORMATION
The company has been through a lot of operational changes in the last few months.
In January, Fuller announced the sale of its beer company to Asahi of Japan for £250m, a transformational move for the 174-year old company.
Instead it has signed a long-term supply agreement with Asahi to give continued access to its iconic London Pride and Frontier beers, as well as Asahi beverages.
The company has also rolled out a new IT system, after operating the old one for the last 28 years, and is moving to a new headquarters in January 2020.
The appointment of new finance director Adam Councell, who begins work in August, will also complete changes to the management team.
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Despite all this upheavel the underlying business seems to be in rude health, with industry beating like-for-like sales growth.
Managed Pubs and Hotels now represents two thirds of revenues and 80% of profits. Revenues were up 8% to £293.8m, leading to operating profits up 5% to £35.1m.
STRONGER FINANCIAL POSITION
The company has indicated that it will return between £50m to £69m of cash to shareholders over the coming months, but is yet to decide whether that will be through a special dividend or share buy-back. Things should be clearer in due course once the finance director has taken up his post and had a look at the business.
The net sale proceeds from the sale of the beer business will leave the company with net debt of £21.7m, compared with net debt of £245.2m at the year end.
This places the company in a good position to invest in the pubs and hotels estate as well as giving it fire-power to make acquisitions.
Investors will need to be patient to see which direction the new management team decide to take the company, and may provide a catalyst for the shares.
