Punch Taverns swings to pretax profit of £60m in fiscal 2016
UK pub operator Punch Taverns said its average profit per pub had increased by 4% in fiscal 2016 Reuters

Punch Taverns has returned to profits. For the 52 weeks to 20 August, the UK pub and bar operator reported a pretax profit of £60m ($74.56m). This is in stark contrast to the £105m loss it reported in the last fiscal.

The second largest pub operator in the country by number of pub estates, said its average profit per pub had increased by 4%. It attributed this to the disposal of non-core pubs, a strategy it completed over the last 24 months.

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Other financial highlights were that the company saw a 3% on-year decline in revenues to £406.8m. Also, its underlying EBITDA was down about 9% to £178m.

Punch Taverns also reported it had cut its net debt by a further 16% in the period to £223m. This it said was 6.6 times underlying EBITDA, down from the 7.2 times it stood in the previous fiscal.

With regards to the operational highlights, the pub company said its retail division was operating ahead of expectations. It said it expected to roll out 150 pubs per year. This was more than the 100 to 120 pubs it had planned earlier. It added that Mercury, its smaller pub division, was on target to deliver like-for-like growth from the end of 2017.

Punch Taverns said the Pubs Code Regulations, which came into effect on July 2016, had a negative impact in the first half of the new financial year. It said this was because it had to re-market all lets in line with the new regulatory requirements.

Duncan Garrood, CEO at Punch Taverns, however, said that the impact from these regulations was just short-term and it would not change the "longer-term growth prospects for the business".

Commenting on the overall results, Garrood said in a statement, "The business has ended the year with a solid set of results, in line with our expectations, and which reflects the completion of our strategic disposal programme.

"We have made good progress towards delivering on the strategy we set out in November 2015. ...Punch has a clear plan for the future, a strategy that is progressing well, and a unique operating model that is expected to drive improved performance over the coming years."