Fuller’s warns over costly divorce from brewing arm
Fuller’s has warned it will cost more than expected to separate its two arms after it sold its brewing business earlier this year to Japan’s Asahi.
The company said that, while it always knew the the divorce would be a big change, the costs associated with the switch “have transpired to be materially higher than expected”.
The sold beer business has needed extra support during the “complex separation period”, the company said in an unexpected statement on Friday morning.
The news means that Fuller’s now forecasts a profit before tax of £31 million over the 2020 financial year, below what the market had been expecting.
Chief executive Simon Emeny said the two businesses were very intertwined, and it had been more difficult to separate them than first thought.
“We haven’t done a transaction like this … the beer company’s been with us for 174 years,” he told the PA news agency.
“Extricating that part of the company is quite complex, and it is taking longer to do than we had envisaged, and it’s been more expensive,” he added.
Tim Barrett, an analyst at Numis who had previously predicted Fuller’s pre-tax profit would be £41 million, said: “Much of this is one-off and related to realigning the group to a pure-play pubs/hotel operator.”
The former brewer hailed a new chapter in its history as it sold the beer business in January, including London Pride.
On Friday, it revealed that like-for-like sales had grown 2.3% in the 32 weeks to November 9, although pressures on the industry has caused its margins to fall.
Total sales in its managed estate grew 5.2%.
Shares dropped 4.8% on the news Friday to 1,000p.
Mr Emeny said: “Trading is good in light of exceptionally strong comparatives last year and the continued challenge of cost inflation facing our sector.
“Our strategy remains on track and we will continue to execute our growth ambitions and maximise the opportunities open to us as a focused pubs and hotel business.”