Enterprise Inns reassures on full year

By Matthew Scuffham

LONDON (Reuters) - Pubs group Enterprise Inns (ETI.L), said on Tuesday it expected earnings and dividends to be in line with market expectations this year as food sales grew, sending its shares sharply higher.

The group, which has 7,700 pubs, said it expected second-half earnings before interest, tax, depreciation, and amortisation to be similar to the 256 million pounds it made in the first half.

Enterprise said trading conditions had, as expected, remained difficult during the second half, with sales hit by last year's smoking ban, the poor summer weather, and weakening consumer spending as household budgets become stretched.

However, the group said it was encouraged by the growth of food sales and that 40 percent of its pubs had managed to grow income from the sale of beer despite declining volumes across the industry.

Numis analyst Richard Carter reiterated his "buy" recommendation saying trading had been "not nearly as bad as some commentators have recently suggested."

"Although sentiment will undoubtedly continue to be negative towards pub groups, we think Enterprise's valuation largely discounts this negative sentiment and offers compelling value," he said in a research note.

Shares in Enterprise were up 12.6 percent at 177 pence at 11:35 a.m., after plunging 60 percent over the last six weeks. Rival Punch Taverns (PUB.L) was up 13 percent at 136.25 pence.

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