* Says dividend could be restored in medium term
* Year pretax profit 175 mln stg, vs forecast 175 mln
* Says economic environment to remain challenging
* CEO targets debt down to 3 bln stg by Sept.2011
* Shares down 11 percent
(Adds CEO, analyst comment, shares)
LONDON, Nov 16 Enterprise Inns (ETI.L),
Britain's biggest pubs group, said it would not pay a dividend
in the current year and expected trading conditions to remain
challenging, sending its shares down 11 percent on Tuesday.
The company stopped paying dividends in May 2009 to help
reduce crippling debt of nearly 4 billion pounds ($6.4 billion).
It left the door open to a resumption of dividends next year if
market conditions improve as it reported full-year results in
line with market forecasts.
"Given the current degree of market uncertainty, the board
does not consider that the resumption of dividends now would be
appropriate," chief executive Ted Tuppen said.
He said subject to market conditions, the board expected
further stabilisation in the pub estates' performance and to cut
debts via cash generation from trading and the sale of pubs.
"On this basis, the board is confident that the business is
in a sound position to deliver positive returns to shareholders
over the medium term, including the resumption of dividend
Shares in Enterprise Inns, which have risen by over 30
percent since Aug. 25 in anticipation the dividend might be
restored, were down 10.7 percent to 97.85 pence at 1000 GMT.
"The dividend has not been restored which is disappointing,"
said KBC Peel Hunt analyst Paul Hickman who kept a 'hold'
recommendation. "Management comments that we need to see an
actual improvement in the trading base, and there are of course
many economic headwinds."
Tuppen described the performance as "creditable" in
difficult circumstances but added that the company was
approaching the current year with caution.
"The economic environment is set to remain challenging and
we do not underestimate the impact of the government's austerity
measures and fiscal tightening which will affect both our
licensees and their customers," he added.
Enterprise sold 579 pubs during the period, raising 166
million pounds and generated proceeds of 114 million through a
sale and leaseback programme. This helped it reduce net debt by
374 million pounds to 3.3 billion.
In an interview with Reuters Tuppen said the group was
looking to sell between 500 and 600 pubs in the current year and
hoped to cut debt to around 3 billion pounds by the year-end.
Britain's pubs have battled with a torrid trading
environment over the last three years as a smoking ban,
recession, above-inflation increases in beer duties and cheap
booze offers in supermarkets kept drinkers at home.
Rival Punch Taverns (PUB.L), which said last month it would
sell another 1,300 pubs after reporting a full-year loss, said
on Tuesday its finance director Phil Dutton would step down in
March next year. Its shares fell 9 percent to 62 pence.
Enterprise Inns, which has 6,820 pubs, reported an
underlying pretax profit of 175 million pounds ($279 million)
for the year to Sept. 30, down from 208 million pounds the year
before, but in line with the average forecast, according to a
Thomson Reuters I/B/E/S poll of nineteen analysts.
(Editing by Mark Potter and Jane Merriman)
($1 = 0.6274 pound)