UK pub operator Greene King today reported an 11.2% drop in full-year adjusted pretax profit, hurt by softer consumer spending, higher costs and bad weather at the start of the year.
Shares of the pub operator, which owns ale brands such as Greene King IPA, Old Speckled Hen and Abbot Ale, fell as much as 6% in morning trade.
The company has been battling rising costs from the UK government's minimum living wage increase, higher property prices and unfavourable currency exchange rates.
Greene King said it expected £45-50m cost inflation for the new fiscal year, as several industry-specific input costs continue to rise ahead of headline inflation.
The company also said consumer confidence remained fragile, despite a slight improvement since the end of last year.
"The current trading environment is still characterised by subdued consumer confidence, intense competition and rising costs," it said.
Greene King, founded in 1799, operates 3,000 pubs, restaurants and hotels across the UK.
Comparable sales for Pub Company, Greene King's key growth driver, fell 1.2% compared with a rise of 1.5% a year ago, due to slower food sales and higher costs.
Greene King said it was targeting a return to like-for-like sales growth for Pub Company in the new financial year, as it expects to save £30-35m.
The company said it has seen strong growth of drink sales recently as it gains from FIFA World Cup matches and better weather after a colder winter at the start of 2018.
Like-for-like sales at Pub Company were up 2.2% in the first eight weeks of the new financial year.
"We are starting to see the benefits from the World Cup, as more than half of consumers expect to watch an England game at the pub," the company said.
The company said its adjusted profit before tax fell to £243m for the year ended April 29, from £273.5m a year ago, but met the company's April forecast of £240-245m.
Its revenues fell 1.8% to £2.18 billion.
