Belhaven profits fizzing, but public spending cuts 'a cloud'

CUTS in public spending are a "dark cloud" over the recession-defying success of Belhaven, the head of the pubs and brewing company has warned.

Belhaven, which owns more than 330 pubs across Scotland, yesterday reported record operating profit in the year to 3 May, of £30.2 million, up 11.9 per cent on the previous year.

The figures for Scotland were well ahead of the performance of Belhaven's parent company, Greene King, south of the Border.

But despite the good results – which covered a period when the recession was taking hold – chief executive Rooney Anand said Greene King was concerned about the impact cuts in public spending would have on jobs, in particular in Scotland.

Anand said the higher proportion of public spending in Scotland compared with the UK was the main cause for concern.

Cuts in public funding could disproportionately hit Scotland he argued, with a knock-on effect on consumers' spending in pubs.

Anand said: "With the general cut backs in public spending that both sides of the political fence are starting to accept will be inevitable, there may be a dark cloud."

He described Belhaven's profit as "a milestone". They have increased by more than 50 per cent since Greene King bought the Dunbar-based business in September 2005.

Belhaven, which brews Belhaven Best, was the fastest growing part of Suffolk-based Greene King's business, with revenue up 9.9 per cent to £136m. Revenue growth across the entire group was just 1.3 per cent. Anand said that as well as the Scottish market being stronger during the period, Greene King had invested heavily in the pub network, buying better sites and disposing of weaker ones.

Last month the company acquired four Scottish pubs as part of a portfolio of 11 sites bought from rival Punch Taverns.

Despite fears for the Scottish market, Anand said the group would continue to seek pub acquisition opportunities North of the Border.

Greene King has invested to improve the food offered in the Belhaven pubs, with food sales increasing from 9 per cent of its pub sales in 2005 to 25 per cent last year.

Across the group, Greene King, which has about 2,500 pubs in all, posted a slightly better than expected 15 per cent fall in pre-tax profits to £118.5m, but held its final dividend at 15.1p a share.

Last year was affected both by a fall in consumer confidence and poor weather in summer.

Anand said yesterday that trading had picked up in recent weeks as the weather improved, and that a good summer could allow some customers to "rediscover" the enjoyment of going to the pub.

The company also pledged to continue to snap up more quality pub sites.

In April Greene King tapped investors for £207m through a rights issue, which it will use to pay down debt and buy pubs.

Anand said: "We are seeing assets being offered to us that would not, under normal circumstances, be offered."

Shares in Greene King rose 3 per cent to 422.25p.