Fuller's goes on a beer hunt as Gales deal lifts profits

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The Independent Online

The chief executive of Fuller, Smith & Turner said yesterday he was eyeing further pub deals after a 31 per cent rise in profits on the back of its acquisition of George Gales & Co.

Michael Turner said Gales, which the London Pride brewer purchased last December for £83m, had been the biggest contributor to the rise in pre-tax profits to £10.9m for the six months to 30 September.

The Hampshire-based country pubs of Gales performed well over the hot summer months and acted as a balance for the snug London pubs of Fuller's which generally do better in winter. The acquisition added 111 extra pubs to Fuller's Inns estate of 251.

Turnover grew 35 per cent to £91.1m across the group, while profits at managed pubs increased 82 per cent and at tenanted inns rose 61 per cent.

However, shares fell almost 4 per cent to 1,500p yesterday after reaching an all-time high on Thursday. Broker Charles Stanley downgraded its rating from buy to hold because of the recent share performance.

Mr Turner said the £17.1m proceeds from last month's sale of the Brigstow Hotel in Bristol would allow the group to invest in new pubs and add to the five acquisitions due to complete in the second half.

"There's a great pressure on companies to consolidate at the moment and I suspect it will continue," he said.

"We would be happy to expand if the right opportunities arose. For example, if a family business was finding it hard to compete we could offer a similar culture."

Chiswick-based Fuller's latest acquisition of The Vintry in the heart of the City of London fits in with the group's increasing emphasis on food before the smoking ban is introduced next year.

Simon Emeny, the managing director of the Inns division, said plans for dealing with the challenges of the ban were well advanced. "The plan is to have a solution for every single pub," he said. This will cost between £3m and £4m but should increase the value of the pubs by the same amount, he added.

At the Fuller's Beer Company, profits rose 14 per cent to £4.2m, with London Pride, the country's leading premium ale, increasing its share of the cask, bottled and canned ale market. The group has recently signed a five-year deal making London Pride the official beer of the English Golf Union.

Douglas Jack, an analyst at Panmure Gordon, said he was raising full-year forecasts by 3 per cent. "Lowly geared, rich in assets and performance, Fuller's is well-placed to supplement trading momentum with acquisitions or share buy-backs," he said.

Meanwhile, Regent Inns, which runs the Walkabout pub chain and Jongleurs comedy clubs, said trading improved in October after the "World Cup hangover" during the summer.

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