High Inflation Hits Greene King's Profits Despite Revenue Growth
Posted by Emily on 27th May 2024
Greene King grappled with a challenging year as high inflation and 'global macroeconomic headwinds' in food, labour, and utility costs significantly impacted its profits, reducing them by a staggering £82 million. This financial hurdle, coupled with the company's transition to private ownership under a Hong Kong-based conglomerate in 2019, led to a period of cost escalation and dwindling consumer confidence.
Brewers Fayre Restaurant by Stephen Middlemiss, CC BY-SA 2.0, via Wikimedia Commons
Chief Executive Nick Mackenzie highlighted additional challenges, including the absence of a major football tournament and ongoing rail strikes. However, he expressed optimism, particularly with the upcoming Euro 2024 football championship expected to boost performance.
Greene King reported a 9.1% increase in group revenue for the year ending December, reaching £2.38 billion, with all four divisions recovering from the pandemic. Statutory operating profit, however, fell by 32.9% to £167.2 million, while adjusted profit decreased by only 3.4% to £186.1 million. Adjusted pre-tax profit also dropped by 4.6% to £63.8 million.
The company invested £150 million in its estate of over 2,600 pubs. Hickory's, a smokehouse restaurant chain acquired in late 2022, expanded from 17 to 21 outlets, with plans for further growth this year.
Last year, Greene King was among a few potential buyers approached by Whitbread regarding nearly 300 underperforming Beefeater and Brewers Fayre pub restaurants. Despite reviewing the opportunity, Greene King decided not to proceed. Competitors Mitchells & Butlers and The Restaurant Group's Brunning & Price chain are also speculated to be possible acquisition targets.
Mackenzie stated that while acquisitions are not off the table, the focus remains on maximising the potential of existing assets. "We're focusing internally on how we drive the business, andthen we'll look at opportunities to see if they support that strategy. Never say never. We look at everything as you would expect," he said.
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