Greene King sees full year performance in line with expectations

British pub group Greene King (LSE: GNK) is confident it will meet expectations for the financial year. The company said it had a relatively strong trading performance over the last nine weeks, despite the impact of recent poor weather. This morning, in an interim management statement for the 38 weeks to 24 January 2010, the FTSE250 constituent reported 4.3% like-for-like retail sales growth.

Like-for-like food sales growth remains very strong and combined with growth in food-related drinks' sales, continue to drive underlying performance in both ‘destination’ and ‘local pubs’, Greene King said. However it is expected that total like-for-like sales growth will moderate through the rest of the financial year, largely due to strong comparatives and the VAT rise. Margins for the second half as a whole are expected to be broadly in line with last year.

The company's own-brewed volumes were up 7.2% during the period. Greene King said the brewery performance was especially strong given the significant weather-related operational issues. The company’s Belhaven brand remains on course for another successful year, with retail like-for-like sales well ahead of the market, up 7.4%. Green King’s underlying tenanted profit per pub was broadly in line with the previous year and the previously strong Belhaven Best volume growth was maintained, and was up 14.9%.

The company continues to focus on reducing overall net debt through organic cash-flow generation and non-core property disposals. According to Greene King it is paying down debt whilst investing in the business to deliver returns to shareholders.

The seven pubs recently acquired from Mitchells and Butlers have bedded in well and are trading in line with expectations. Furthermore, the company said that it continues to find acquisition opportunities.
Greene King made its latest acquisition with the purchase of eight managed pubs from Punch Taverns (LSE: PUB), for £15.9 million in cash, as announced by Punch this morning. The pubs are freehold outlets located around Great Britain including one in central London and one in Scotland.

Green King expects to return these pubs to normalised, historic trading levels equating to approximately 9xEarnings. The pub company said that the intrinsic quality and location of these pubs, combined with the historic yield they have generated, would support a value in excess of £16m for the assets.  http://www.proactiveinvestors.co.uk/companies/news/12665/greene-king-sees-full-year-performance-in-line-with-expectations-12665.html