Punch Taverns sees profits fall at its leased estate
Punch Taverns, the UK's largest pub company, has seen profits at its leased estate drop due to "the very challenging trading environment".
In an interim management statement released today, the pub group revealed it was now paying £1.6m per month to support tenants via rent concessions and product discounts, compared with just £400,000 per month at this time last year.
Amongst its 7,600-strong leased estate like-for-like profit in the 20 weeks to 10 January has slipped 12% year-on-year.
Within its managed Spirit estate, which includes the Chef and Brewer brand, like-for-like sales in the period were down 2.5%, despite improved business during the Christmas period.
However, Punch said it remained able to meet its sizeable debt repayments despite the fall in trade and would continue to pay debt down through the remainder of the year.
The company is also reducing its capital expenditure this year by £35m to £85m, due to the "deteriorating economic outlook" and remains "extremely cautious over the near-term".
Mark Brumby, leisure analyst at Blue Oar Securities, warned that, with the likes of JD Wetherspoon selling Greene King IPA at 99p and Punch's tenants unable to compete, the amount of financial support they require would increase in the medium term.
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By Chris Druce
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