- Strong growth in full year sales
- Positive start to the new financial year
- Dividend up 9%
Pubs group Young’s (YNGA:AIM) delivered a 19.4% increase in full year sales which drove an 8.1% increase in pre-tax profit despite cost headwinds and Covid one-offs.
Trading in the new financial year has started well with managed pub like-for-like sales up 4.8% in the last seven weeks.
The shares rose 0.5% to £11.70 taking the gains since October to 30%.
HOW DID THE COMPANY PERFORM?
Sales for the 53 weeks to 3 April grew 19.4% to £368.9 million, underpinned by a 12.9% increase in managed pub like-for-like sales and ‘strategically selected’ acquisitions.
Despite the impact of food inflation and a rise in the living wage, combined with Covid-related VAT reduction and business rates relief totaling £18.3 million falling out of the comparison, adjusted pre-tax profit increased 8.1% to £45.2 million.
The one-off benefits meant adjusted operating profit margins fell to 14.2% from 16.6% in the prior year. But the company remains positive that the worst of the cost squeeze is now behind it.
‘Our business remains highly profitable and over the coming months, as inflation is predicted to soften, we are confident that margins will improve.’
Healthy free cash flow generation has enabled the group to make ‘significant’ investments including £24 million on acquisitions and £34.4 million across the estate.
The group also increased the annual dividend by 9.1% to 20.52p per share after recommending a final pay out of 10.26p per share.
Despite investing heavily in the business and increasing the dividend, Young’s net debt reduced by £8.6 million to £165.2 million representing a leverage ratio (net debt to earnings before interest, tax, depreciation, and amortisation) of 1.9 times from 2.1 times.
WHAT DID THE COMPANY SAY?
CEO Simon Dodd commented: ‘The positive trading momentum of the first half continued throughout the period, with unwavering customer demand for our outstanding pubs and the unrivalled Young's experience.
‘The negative impact of the rail strikes did not stand in the way of us achieving numerous record weeks, as sales were boosted by glorious summer sunshine and the first ever winter FIFA World Cup.
‘It's been a good start to the new financial year with sunny weather over Easter and the early May bank holiday. There is also huge excitement for the Rugby World Cup later this year.
‘We are confident our premium, well-invested predominantly freehold pub estate, alongside our healthy balance sheet, will continue to deliver superior returns for our shareholders.’
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