Opening at £5.50, Greene King shares 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 UK’s largest pub retailer and brewer 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 in Greene King shares that left them 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 shares do currently find themselves at a trading price of £5.21.
Positive first quarter update
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 Wednesday’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 shares have a consensus rating of ‘Hold’ alongside an average target price of £5.78.
