Broker snap: Results justify Fuller's premium rating

5th Jun 2009 13:12

Underlying profits at brewer Fuller, Smith & Turner were, unlike its beer, flat, but this represents a strong performance in the current environment, and one that was slightly ahead of market expectations.Profit before tax, excluding exceptional items, eased 1% to £22.8m from £23m the year before, ahead of the £21.4m predicted by broker Charles Stanley and also 'comfortably ahead' of the figure predicted by KBC Peel Hunt.Charles Stanley points to 'encouraging momentum' in Fuller's managed estate, with like for like (LFL) growth of 3% over the year representing an improvement on the figure for the first 43 weeks of the year as indicated in the company's interim management statement.The tenanted estate, meanwhile, saw LFL profits dip 2%, a figure that nonetheless will be looked at with envy by many of the company's peers. On the brewing side, operating profits were up 4% while volumes were level. Overseas customers seem to be developing a taste for ale, judging by the 11% volume growth in overseas sales. KBC has provisionally upgraded its profit before tax forecast for the current financial year by 4% to £22.2m and has retained its 'hold' position in view of the fact that the shares trade above its 450p target price.Charles Stanley's recommendation is 'add', with a price target of 575p, saying the stock's 'premium rating to the market is proving warranted as evidenced by these results.'