Some progress for Enterprise Inns

<p>Shares of UK-based pub operator, Enterprise Inns, went up today (13th May) following the release of the company’s first-half results. For the six months ended […]</p>

Shares of UK-based pub operator, Enterprise Inns, went up today (13th May) following the release of the company’s first-half results.

For the six months ended 31st March, Enterprise Inns took revenue of £308m, down from £312m in the same period last year.

Like-for-like net income (representing like-for-like gross profits across its pubs), however, increased by around 1%, at some £180m. 

That marks a change from the decline posted in the same period the prior year and also represents its third sequential quarter of like-for-like net income growth.

Growth in the period was partly thanks to decent trading in its businesses in the south (notably in and around London), where net income grew 2.7% at £77m.

Meanwhile, the company’s net profit came in at £37m, an increase over the prior year’s figure of £25m – predominantly helped by lower exceptional property charges.

Enterprise Inns’ numbers are hardly mind-blowing but…

It shows progress, given the difficulties faced by the company (and indeed the overall pub industry) over the recent past.

Weighed by a heavy debt load, together with a rise in the number of its Publicans going out of business as tough conditions persisted, it wasn’t that long ago that questions abounded regarding the future of Enterprise Inns.

Faced with said difficulties, the company embarked on a number of turnaround initiatives – such as moving to dispose of underperforming pubs and reinvesting for refurbishments as it looked to boost sales.

In the first half of this year, the company disposed of 129 pubs, garnering some £40m in proceeds; and a gradual reduction in its debt means that the company’s net debt now stands at £2.5bn (as at March), down from £2.7bn last year and £3bn in 2011.

Meanwhile, improving trading conditions have helped drive a reduction in business failures – down 16% versus the previous year.

Of course, the company’s shares reflect its progress over the last few quarters – up some 32% over the last year (though down 13% from a peak in January).

To be sure, the company still has a long road ahead, but, a notable return to growth in the long term seems less far-fetched now.

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