Greene King Rallies 4%


LONDON -- Greene King (ISE: GNK.L) rallied 23 pence, or 4%, to 587 pence in early London trade after the pub and brewing group published details of its current trading.

The FTSE 250 firm, which operates about 2,300 pubs, restaurants, and hotels across Britain and owns the Hungry Horse and Old English Inns chains, said like-for-like sales had advanced 5% during the summer.

Greene King confirmed underlying food sales had experienced 5.2% growth, with drinks sales recording 5.0% growth and room sales registering 4.9% growth. The group confirmed the Olympics had a "minimal net impact" on the overall performance.

Greene King also said profits per tenanted pub had risen 4% and total beer volumes were up 0.4%. Old Speckled Hen and Greene King IPA were among the beers to achieve "good growth."

Looking ahead, Rooney Anand, Greene King's chief exec, said:

We believe underlying trading trends across the business have been maintained through the summer, despite the disappointing weather. This is encouraging for the rest of the year, although we expect consumer confidence to remain subdued.

However, we remain confident that our Retail growth strategy, combined with our focus on delivering excellent value, service and quality to our customers, will continue to deliver earnings and dividend growth for our shareholders.

This morning's statement ought to reassure Greene King's investors and underpin modest profit and dividend growth for the current year. City projections made before today currently place the shares on a P/E of 11 and yield of 4.3%.

The present rating looks fair, especially as Greene King's dividend has inched higher every year throughout the banking crash and subsequent recession.

Indeed, such dividend resilience could make Greene King a possibility for Neil Woodford, the legendary fund manager whose blue-chip income portfolios thrashed the FTSE 100 during the five, 10, and 15 years to 2011.

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