Fuller's pumps up dividend as it enters cider and lager markets - UPDATE

7th Jun 2013 08:16

Brewing and pubs group Fuller, Smith & Turner raised a glass to full year results that showed sales growth across the business by lifting the final dividend 10 per cent.The London Pride group said the market was tipping towards craft brewers such as itself and away from its mass market rivals, but warned that the UK industry's beer volumes remained in decline.Post period-end, on 4th June, the group sallied forth into the premium cider market for the first time with the acquisition of Cornish Orchards Limited for £3.8m, while also launching its first lager beer since the 1980s, called Frontier. Fuller's enjoyed sales frothing up 7% to £271.5m in the year to 30th March, with profit before tax pumped up 25% to £35.2m including exceptional items. The group's largest segment, managed pubs and hotels, grew revenues 9% helped by the one-off boost of the Olympic games and drinks sales rising only 0.9% due to the wet summer 2012 and spring 2013.Four pubs were acquired during the year, two managed and two tenanted.Operating profits increased 6% to £19.4m despite operating margins slipping from 11.8% to 11.4% due to inflation in utilities and business rates and a slightly higher impact of lost business days to refurbishments. The Fuller's Beer company poured a similar volume of beer, boosted by foreign beer, to see revenues bubble up 4% to £113.6m. Operating profits dripped 3% to £8.7m due to increased depreciation charges from the significant investment in additional tank capacity the previous year. However, this investment, which was made to support high growth in the Off Trade and Export areas, meant that these areas accounted for two out of every five barrels sold, with export volumes lifted 97% over the last five years. A new post-year-end strategy for the Beer Company has been put in place, including the launch of the Made of London advertising campaign, an 'elegant' new London Pride bottle launched, and the launch of a new-wave craft lager called Frontier that is brewed over 42 days "for a more memorable flavour" - its first lager beer since its unsuccessful 'K2' tipple in the 1980s.Chairman Michael Turner said: "I am pleased to announce a strong performance by the group, driven by our pub acquisitions and developments."A proposed final dividend of 8.35p per A-share and C-share was a 10% increase, lifting the total dividend 8% to 13.7p. Turner added: "Trading for the current year has started positively and like for like sales in our Managed Pubs and Hotels were up 7.0%. "We look forward to the prospect of a year less blighted by the weather in which consumers are inspired to enjoy the summer in the great British pub, or even better, in that pub's garden."Broker Numis has raised its underlying forecasts, which assume the acquisition of only two new managed pubs per year, but changes to pensions accounting lowers its forecasts 1%. "Our forecasts assume a continuation in last year's trends," said analyst Douglas Jack, "so there should be upside against easy weather-related comparatives."In the licensed retail sector, Fuller's has the lowest leverage, the highest average asset quality and one of the best operational track records. These factors justify its premium rating, in our view."Shares in Fuller's were up 2.9% at 905.5p at 12:30 on Friday.OH