GREENE King chief executive Rooney Anand has highlighted the potential challenges posed by the Brexit vote as the company achieved record first half sales and underlined its commitment to Scotland.
The Belhaven owner grew sales by around 14 per cent to £1.04 billion in the 24 weeks to 16 October amid what Mr Anand described as challenging times, helped by the £774 million acquisition of the Spirit group.
Mr Anand said the full impact of the UK’s decision to leave the European Union remains unclear. However, Greene King is braced for consumers to cut spending while the fallout from the Brexit vote will put pressure on costs.
“Looking ahead, increasing levels of consumer uncertainty, further cost pressures and the changing dynamics of eating out, mean the consumer environment is likely to become more challenging,” said Mr Anand.
Noting the fall in the value of the pound following the Brexit vote, Mr Anand said the company expects currency changes to result in the price of some of the food it buys increasing.
Greene King may have to choose between accepting cuts in the profit margins it achieves on food sales, an important driver of growth, or trying to pass on cost increases to consumers.
The Suffolk-based group noted restrictions on immigration from outside the UK would place further pressures on the hospitality industry, with possible implications for its wage bill.
Cost increases in the first half were largely due to the introduction of the National Living Wage.
Mr Anand said: “We are confident that the strength of our brands, pubs, people and cash generation leaves us well placed to deliver another year of progress.”
Greene King expects the synergy benefits it will achieve following the purchase of Spirit last year will help to offset any increases in costs.
Mr Anand said the company was very pleased with how the business has been performing in Scotland.
It has around 300 pubs in Scotland and the Dunbar-based Belhaven brewing business which it acquired in 2005.
The estate includes The Scotia Bar, which Belhaven reckons is the oldest pub in Glasgow, and the Advocate in Edinburgh.
“We are very, very committed to our business in Scotland,” said Mr Anand.
The reduction in the drink driving limit imposed in the country 2014 is no longer acting as a drag on sales.
Greene King supports the principle of a minimum price per unit of alcohol being imposed on sales to help promote responsible drinking.
Mr Anand did not express concern about the possibility of the Brexit vote resulting in another independence referendum in Scotland. He noted the expectation there could be a different outcome regarding relations with the EU in Scotland could add to consumer uncertainty.
Greene King grew profit before tax and exceptionals by 15 per cent to £139m in the first 24 weeks, from £121.3m last time.
Shares in Greene King closed down 4 per cent, 25.5p, at 686p.
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