There's a more upbeat tone to Fuller, Smith & Turner's (FSTA) results than there has been for some time. We're not referring to sales which remain good. It is the new initiatives and renewed invigoration towards progressing the business that stands out. The market liked the news, sending the shares up 1.7% to 895p.


Fuller's has generally been seen as a high-quality but quite traditional operator. Today's results show a move into cider, a new site planned for Heathrow airport next year complete with picnics for travellers, a new service to book hotel rooms over smartphones and a move to capitalise on the UK's growing passion for niche but tasty beers from around the world. The company is striking exclusive UK distribution deals starting with a German lager called Veltins and a product from Belgium called Chimay Gold.

V2 Fuller’s forms partnership with Bières de Chimay to exclus


The full-year results at the centre of today's announcement, covering the period to 30 March, show pre-tax profit of £35.2 million, up from £28.8 million a year ago. The dividend's been lifted by 10% and net debt to EBITDA (earnings for interest, tax, depreciation and amortisation) has edged down to 2.6 times from 2.7 times a year ago.


The start of the new financial year has been good with 7% rise in like-for-like sales in the nine weeks to 1 June. This has led Numis to question if its forecasts for March 2014 year-end are too conservative. Prior to today's results, the stockbroker has expected 3% like-for-like sales growth in Fuller's managed pubs arm and just two pub acquisitions. It says these forecasts now have the potential to be upgraded.


'Fuller's has the lowest leverage, the highest average asset quality and one of the best operational track records,' says Numis analysts Douglas Jack. 'These factors justify its premium rating.'


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


An interesting development is Fuller's move into the world of cider. The business has traditionally focused on ale and lager. Now it has spent £3.8 million on Cornish Orchards, a 14-year old business that produces premium cider in Cornwall. Its facilities have potential for expansion, says Fuller's which likes the cider market for 'strong growth and healthy margins'.


Fuller's acquisition of Cornish Orchards, premium cider producer

Issue Date: 07 Jun 2013