Shares in brewer and pub company Fuller, Smith & Turner (FSTA) rise 3.6% to 949.5p on the back of better than expected half-year results and a pipeline of new pub openings.

Profit before tax is up 8% to £19.6 million, ahead of forecasts of £19.0 million, with earnings per share rising 12% to 27.67p. Revenues increase by 10% to £161.6 million driven by particularly strong food sales. Food sales are up 14% in the 26 weeks to 27 September, outpacing the 6% rise in beer and cider sales. This continues a positive trend reported at the full-year results on 6 June.

Fuller’s managed pub and hotels business, which comprises 183 sites, sees like for like sales rise by 6.5% and profits increase by 13%. The company bought three managed pubs in the first half of the year and opened its first airport pub, London’s Pride at Terminal 2.

FULLER SMITH & TURNR'A' - Comparison Line Chart (Rebased to first)

The group had record levels of refurbishment downtime during the period – 80 weeks of closures versus 29 in 2013 – and higher repair costs which offset most of the 70bps improvement in gross margins. Managed EBITA (earnings before interest, tax and amortisation) margins rose 30bps.

The company recently opened another two managed pubs – The Admiralty on Trafalgar Square and One Over the Ait at Kew Bridge – while two Thames riverside pubs are due to open in 2015.

Meanwhile, in its tenanted division, which is made up of 205 pubs, like for like profits are up 5% while revenue of £16 million is in line with the previous year as a result of pub disposals.

The vote by MPs to effectively end the beer tie in the pubs industry doesn’t affect Fuller's directly as the bill applies to companies with more than 500 pubs. However, chief executive Simon Emeny says the vote will do ‘significant damage’ to community pubs and is not good news for consumers or the industry.

Earlier this year Fuller's bought a 51% stake in South West-based The Stable, a fledgling craft cider and gourmet pizza business. The company is hoping to appeal to a younger, female crowd and plans to open four more Stable restaurants next year.

The group’s trading and expansion momentum leads stockbroker Numis to upgrade its forecasts by 2%. Profit before tax consensus for 2015 stands at £35.3 million.

The company increases its interim dividend by 10% to 6.4p.

Issue Date: 21 Nov 2014