Greene King delivers improved revenue performance but profitability impacted by the cost of doing business: Greene King has said it delivered an improved revenue performance in the year to 31 December 2023 but its profitability was impacted by the heightened cost of doing business. It said its new Hickory’s sites are all trading above expectations, while its Hive franchise sites are delivering strong returns on investment and its Pub Partners leased and tenanted pubs continue to generate significant and stable cashflow. Adjusted group revenue grew 9.1% year-on-year from £2,176.4m to £2,375.4m, while an adjusted pre-tax profit of £66.9m in 2022 was down 4.6% to £63.8m. A statutory pre-tax profit of £98.4m in 2022 was down 54.1% to £45.2m. Group adjusted operating profit was down 3.4% from £192.6m to £186.1m. Statutory operating profit was £167.2m, down from £249.2m in the prior period. The group said the reduction of £82m was “primarily due to a change in nature of adjusting items and due to the continued pressure on profit as a result of the rising cost of inflation and global macroeconomic headwinds particularly impacting food, team and utility costs”. The number of Partnerships & Ventures pubs was down from 1,128 to 1,125 but revenue was up 23.2% from £341.7m to £420.9m. Adjusted Ebitda was down 3.1% from £109.4m to £106m. Adjusted operating profit was down 12.8% from £89.8m to £78.3m while statutory operating profit was down 40% from £113.3m to £45.3m. Brewing & Brands revenue was up 9.8% from £208.3m to £228.7m while adjusted Ebitda was up 8.4% from £29.7m to £32.2m. Adjusted operating profit was up 3.4% from £20.6m to £21.3m while statutory operating profit was down 20.2% from £26.3m to £21m. The number of Greene King pubs was down from 913 to 898 but revenue was up 9.6% from £855.9m to £938.4. Adjusted Ebitda was up 9.1% from £161.3m to £176m. Adjusted operating profit was up 8.9% from £111.8m to £121.7m while statutory operating profit was up 0.5% from £131.9m to £132.5m. The number of Destination Brand pubs was up from 595 to 600 and revenue was up 2.2% from £770.5m to £787.4. Adjusted Ebitda was down 4.3% from £94.4m to £90.3. Adjusted operating profit was down 8.5% from £51.9m to £47.5m while statutory operating profit was down 22.1% from £66.5m to £51.8m. The company said it delivered a robust financial performance and industry-leading investment programme amidst a challenging economic backdrop. Its performance was driven by strategic delivery and business transformation, key to which has been the strengthening of major brands, while a focus on driving operational efficiency to support investment plans continued. It said the prevailing inflationary environment continued to put pressure on consumer confidence but there was strong festive and new year trading, despite wet weather. The Coronation, Women’s World Cup and Men’s Rugby World Cup all drove event-led demand, while the group delivered growth in premium beer volumes and increased value share in the traditional ale market. Capex of £215m (2022: £208.1m) was invested across the business, while the group continued to be cash generative from operating activities, with free cash flow of £9.6m in the year (2022: £13.1m) after significant
investment. It said the capital structure of the group remains robust, with strength and flexibility of the balance sheet maintained. A total of 27 pubs were moved to new trading formats to better serve their communities, while a best-in-class Wi-Fi programme was completed across 95% of the managed estate. It added the Cart & Horses in Winchester and Prince of Wales in Esher to its premium Crafted Pubs brand, bringing this format up to six sites in total. Four new sites Hickory’s sites opened, which are all trading above expectations, while Hive franchise sites grew from 28 to 45, with strong returns on investment. Pub Partners continued its robust performance, with 932 leased and tenanted pubs continuing to generate significant and stable cashflow. The group’s team engagement score improved from 84% to 87%, reflecting an improving culture, while team turnover reduced to 66%, down 12 ppts over the course of the year. Looking ahead, the group said it “remains confident about the future” and continues to see the benefits of “industry leading investment in transformation across our brands and culture, with major investment programmes driving sustainable returns”. It will launch a new digital app platform in 2024 to increase customer engagement and step up its investment in decarbonising its pub estate. However, it remains “mindful of the significant cost pressures impacting both consumers and our business” and expects the “tough environment to persist through the year”. Chief executive Nick Mackenzie said: “We are building a stronger more sustainable Greene King that is fit for the future, and during 2023 we drove that business transformation through our industry-leading investment programme. There is evidence that this is delivering, as we achieved a robust financial performance alongside significant strategic progress. This was despite the prevailing macroeconomic challenges that influenced much of the year, and whilst we delivered an improved revenue performance reaching above pre-Covid 19 levels, our profitability was impacted by the heightened cost of doing business. This is an ambitious business investing for the long term to build a balanced portfolio, innovating across new concepts, digitisation and the evolution of existing brands. But, at our core, we are about delighting our customers, and this wouldn’t be possible without our 40,000 team members, and our pub partners, all of whom help us play a meaningful role in the communities in which we continue to serve. While we expect the tough backdrop to continue in 2024, our team is confident and excited about the future of this business and industry in which we operate.” Greene King features in the Premium Club Turnover & Profits Blue Book. Its turnover of £2,375.4m for the year ending 31 December 2023 is the third highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email kai.kirkman@propelinfo.com to upgrade your subscription.