April 30, 2019 / 6:47 AM / 22 days ago

Pub operator Greene King's happy Easter doused by cost pressures

FILE PHOTO: A pint of beer is poured into a glass in a bar in London, Britain June 27, 2018. REUTERS/Peter Nicholls/File Photo

(Reuters) - Greene King Plc forecast annual pretax profit above analysts’ expectations as more Britons headed to its pubs over a warm and sunny Easter, but worries over persistently high costs pushed its shares lower.

The company, which replaced its long-time boss in November, has been battling with an increase in the minimum wage, higher property prices and a move away from pub drinking by younger Britons.

Shares in the brewer of Greene King IPA, Old Speckled Hen and Abbot Ale fell as much as 6.7 percent and were on course for their biggest one-day fall in more than 10 months.

Although the company reported higher like-for-like sales in the 52 weeks to April 28, helped in part by better Spring weather conditions compared to last year, JP Morgan analyst Ted Nyhan expects pressure from higher input costs, labour and utilities to continue in 2019.

“The company itself does not expect to be able to mitigate all of the cost headwinds it faces...despite significant savings anticipated in the second half,” Nyhan said.

Greene King said it expects to limit net cost inflation for its financial year just ended to between 10 million pounds and 20 million pounds.

Total comparable sales for Greene King’s Pub Company, through which it manages its chain of about 2,800 pubs, restaurants and hotels, rose 2.9 percent for the year ended April 28, while Easter weekend comparable sales rose 4.6 percent.

Greene King said it expects annual pretax profit excluding items of between 244 million pounds and 247 million pounds for the year just ended, compared to the company-compiled average analyst consensus of 243.9 million pounds.

It will publish full-year results on June 27.

Reporting by Chris Peters and Shashwat Awasthi in Bengaluru; Editing by Shounak Dasgupta and Kirsten Donovan

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