Belhaven profits up 16% after revamp

Operating profits from Greene King’s Scottish Belhaven division soared 16% as it ditched what its chief executive called "West Lothian beer shops" and focused its outlets on an older, more female customer base.

UKwide, the company showed signs of defying the consumer spending slowdown with a 2% rise in pretax profit to £142m UKwide in the 53 weeks ended May 4, well ahead of estimates.

But Dunbar, East Lothianbased Belhaven, which Greene King bought in 2005, performed particularly strongly as the company revamped its estate.

Chief executive Rooney Anand said: "When we bought Belhaven we knew the business was good but wanted to continue the activity in singlesite acquisitions. We are buying some very good quality sites but losing some of the weaker businesses to keep the number of sites broadly the same."

He added: "We sold some of the West Lothian beer shops and spent more money buying broaderbased businesses with family appeal."

Belhaven’s estate grew from 299 to 321 over the year including seven pubs transferred from its English retail business. Of these, 95 are managed and the rest tenanted.

Anand indicated that the division had prospered by moving away from younger, more fashionable customers to an older clientele, particularly women. He highlighted the turnaround of the City Walls pub in Stirling and Dumfries’s Granary Bar as examples of what the company wanted to achieve.

He said that his staff in these outlets valued their fashionable image, but added: "We felt that these are businesses that require phenomenal amounts of capital to present them as the trendy place to go."

He said that the switch to a broader customer base had seen revenues soar more than 300% in the two outlets, of which 30% now comes from food.

Food sales at Belhaven have risen 50% since the Scottish smoking ban two years ago, numbers that were seized on by analysts as a sign that the business south of the border could also prosper as the company establishes its position in the wake of its smoking ban 12 months ago.

In all, Belhaven saw revenue rise 8% to £126.1m, operating profit increase 18% to £27.5m and the operating profit margin expand by 1.8 percentage points to 21.8%. Included in this is Belhaven’s drinks business which expanded grew beer volume and profit in an ontrade sector that saw falling sales. Volumes for its flagship Belhaven Best were up 4.6%.

The firm also announced that Stuart Ross, Belhaven’s chief executive at the time of its takeover by Greene King is to retire in the autumn after 20 years leading the business, although he will stay on in an advisory capacity.

Anand said in a statement: "The results achieved in Scotland this year make a fitting valediction. Stuart’s commitment and workrate have been as strong in this, his retirement year, as in any other year.

"The process to find a replacement to lead Belhaven through its next stage of development is well under way."

UKwide Green King has 800 managed outlets. These include the Loch Fyne Restaurants chain it bought last summer expanding the number of restaurants to 39 after converting a number of Greene King pubs. It also has more than 1400 tenanted pubs and a brewing arm.

Anand was cautious about the future, highlighting rising costs and a slowing economy.

"I think we have quite a lot of resilience built into the business and I am confident we will do as well as anybody will do in this type of business," said the company’s chief executive.

Overall its revenue rose 5% to £960.5m with food accounting for a third, having risen 31% over the year. Its shares finished the day up 8.2%, or 33p at 433.25p.