Opening at £5.50, the UK’s largest pub retailer and brewer had sunk to £4.60 by the start of April, its worst price in around 6 years. Yet a sharp rebound across spring, and first half of summer, saw the stock rocket to £6.40 towards the end of June, a remarkable turnaround and a 9 month-plus peak.
Sadly as quickly as this rise came it disappeared. An 11.2% drop in full year pre-tax profit as June came to a close sparked decline that left it back at £4.75 by the start of September, a slide only stalled by a decent Q1 statement early in that month. Since then it has struggled to break beyond £5 with any serious longevity, though Greene King PLC currently finds itself at a trading price of £5.21.
As mentioned, September’s first quarter update was pretty good, aided significantly by the World Cup and heatwave. Its Pub Company division saw a 2.8% jump in like-for-likes, more than double the 1.2% growth seen in the market as a whole, with its Greene King branded local pubs specifically seeing a healthy 5.5% rise in LFLs.
Total beer volumes, meanwhile, were up 4% in Brewing & Brands, and own-brand volumes rose 0.3%. Pub Partners net profit, however, dipped 0.4%, ‘impacted by the timing of higher overhead costs’ which are expected to balance out over the year.
In terms of this week's interim statement, investors will want to hear that its cost mitigation programme, which aims to save £45 million to £50 million to help offset gross cost inflation, is still on track.
Beyond that it will be interesting to see whether it can maintain a decent level of like-for-like sales growth in Q2 without the anomalous boosts it saw over the summer. Any word on a replacement for the departing CEO Rooney Anand could also be important.
Greene King PLC (LON:GNK) has a consensus rating of ‘Hold’ alongside an average target price of £5.78.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved.