Greene King Toasts Profit Hike As Pay Rises

Greene King (Other OTC: GKNGY - news) has announced an 18% rise in half-year profits - saying its customers are benefiting from rising wages.

The company, which operates more than 3,000 pubs, restaurants and hotels including Hungry Horse and Loch Fyne, said profit before tax in the 24 weeks to 18 October came in at £72m.

The brewer credited growth in revenue across each division and said the integration of its smaller rival, Spirit Pub Company (LSE: 120214.L - news) , was progressing ahead of schedule after the £774m acquisition was completed in July.

It (Other OTC: ITGL - news) added that its initial guidance on cost synergies was being raised by £5m to £35m.

Greene King released its results alongside its latest Leisure Spend Tracker, which charts trends in consumer spending on a monthly basis.

The study, compiled by YouGov (LSE: YOU.L - news) , measured spending on eating and drinking out increased by 5% and 11% respectively year-on-year in October.

It cited the popularity of the Rugby World Cup and said drinking out increased across all household types.

Cheap drink promotions in supermarkets - coupled with the squeeze on household income following the financial crisis - was partly blamed for the closure of scores of pubs as more people chose to drink at home to save money.

While pubs are still closing - at a rate of 29 a week according to the industry body CAMRA - Greene King suggested that custom was continuing to pick up now that wage increases were outpacing inflation.

In September, it launched an advertising campaign, using material filmed by its landlords, to promote the company's pubs as being at the centre of British communities.

Commenting on the results, chief executive Rooney Anand said: "It has been a strong first half, with the Greene King business strengthening and significant progress made in the Spirit integration.

"Like-for-like sales growth in Greene King Retail improved during the half and both Pub Partners and Brewing & Brands delivered profit growth and margin expansion."