Young's Reports Strong Revenue Growth Amid Industry Headwinds
Why we think this is neutral
Young's has delivered a mixed bag of results. On the positive side, there's strong revenue growth of 24.9% and like-for-like growth of 5.7%, alongside a maintained adjusted operating margin of 14.7%. The dividend increase of 6% also signals confidence. However, these positives are tempered by a 12.6% drop in statutory profit before tax and a cautious outlook mentioning consumer headwinds and industry-wide challenges. The successful integration of City Pub Group is encouraging, but it's unclear how much of the revenue growth is organic versus acquisition-driven. While recent trading looks promising with 8% like-for-like growth in the last nine weeks, the company's warnings about economic uncertainty and government changes create a cloud over future performance. The reduction in net debt is positive, but overall debt levels remain high. In this context, Young's seems to be holding its ground in a challenging environment, but with significant hurdles ahead.
Key Points
- Total revenue up 24.9% to £485.8 million
- Like-for-like revenue growth of 5.7%
- Adjusted operating margin maintained at 14.7%
- Statutory profit before tax down 12.6% to £18.1 million
- Net debt reduced by £19.5 million to £248.3 million
- Total dividend up 6.0% to 23.06 pence
- Recent trading shows 8.0% like-for-like growth in last nine weeks
- Successful integration of City Pub Group completed
- Warnings of consumer headwinds and industry challenges
- Cautious outlook due to economic uncertainty and government changes
Summary
Young's has reported a 24.9% increase in total revenue to £485.8 million, with like-for-like revenue growth of 5.7%. The company maintained its adjusted operating margin at 14.7% despite cost pressures. However, statutory profit before tax decreased by 12.6% to £18.1 million. The integration of City Pub Group has been successful, realizing synergies and operational benefits. Recent trading shows promise with like-for-like managed house revenue up 8.0% in the last nine weeks. Despite these positives, Young's warns of headwinds facing consumers and wider industry issues. The company has reduced its net debt by £19.5 million to £248.3 million, but total debt remains high at £336.3 million. The board has recommended a 6.0% increase in total dividend to 23.06 pence, reflecting confidence in performance despite challenges ahead.