Greene King cheers with rising sales

Greene King yesterday bucked the downbeat trend in the pubs sector with strong full-year results as the pub group sounded a warning about "potential pitfalls" in the industry's current fixation with tenanted estates.

The brewer, whose brands include Old Speckled Hen, Abbot Ale and Greene King IPA, said it saw no sign of the downturn still engulfing its rivals, adding underlying trading was improving. It said like-for-like sales across its 570-strong managed house arm rose 0.9 per cent in the year to 4 May, and were up 1 per cent in the eight weeks to 29 June. Its shares rose 19.5p to 814.5p.

Commenting on the recent turmoil in the managed sector that has seen several chains collapse into administration, Tim Bridge, the chief executive, called the problem "specific" rather than "generic".

Mr Bridge warned: "The current vogue for tenanted estates should not blind us to the fact that there can be potential pitfalls in the tenanted model." He listed the danger of setting rents too high and an absence of talented landlords as among the problems to watch out for.

The company, which owns nearly 1,700 sites in the South of England, including 1,140 tenanted pubs, beat City forecasts to report profits before tax, goodwill and exceptional items up 8 per cent at £75m. Turnover in the year to 4 May, which was boosted by the acquisition of the Old English Inns and Morrells pub estates, was 8 per cent higher at £535.6m. While swallowing the entire 1,400 pubs recently put up for sale by Scottish & Newcastle would be beyond Greene King's reach, the group signalled its intention to bid for any small parcels of sites that trickle onto the market.

Greg Feehely, an analyst at Altium Capital, said the company may opt to hold fire on its share buy-back programme "to see what opportunities arise from the inevitable shake-up of the pub industry triggered by the S&N Retail auction".