Pub chain Fuller’s faces £10m rise in energy costs
Pub chain Fuller’s warns it faces a £10m increase in energy costs as it tries to recover from Covid-19 shutdowns
- Fuller’s full-year gas and electricity costs will be £18 million, up from £8 million
- It told investors it is currently taking energy and cost-saving measures
Fuller, Smith & Turner will pay an additional £10 million in gas and electricity costs this financial year as a result of the ongoing energy crisis.
The pub chain told investors on Tuesday that it is facing “significant increases” in costs and that it has purchased additional forward contracts to cover projected gas and electricity needs for the year.
While stressing that the benefits of the government’s recently announced energy support plan for businesses are still unknown, Fuller said it now expects full-year gas and electricity costs to be £18m, compared to £8m last year.
Analysts say the Truss government’s mini-budget on Friday could alleviate some of the cost problems Fuller faces
Fuller’s added that it has made progress in implementing cost-cutting initiatives and will introduce more schemes to “help reduce these cost increases in the medium term.”
Chief executive Simon Emeny said: “Businesses in the hospitality industry are facing unsustainable increases in energy costs.
“Despite proactively buying forwards to mitigate the impact on Fuller’s, we will see significant increases this year and we are urging the government to provide much-needed clarity on its proposed support package so that we can plan accordingly.
“We are looking forward to the upcoming World Cup and our first restriction-free Christmas in three years. The future may present more hurdles to navigate, but Fuller’s is a long-term company with a clear vision and the people, property and financial firepower to deliver consistent returns over the long term.”
Fuller, Smith & Turner Stocks fell 2 percent to 498p in late afternoon trading. They are down 33.8 percent so far in 2022 and 58.2 percent from their peak in August 2019.
The group also reported Tuesday that the first 25 weeks of the fiscal year were up 3 percent from pre-pandemic levels and up 50 percent from the same period last year.
In July, the company joined two other British pub owners – Marston’s and Mitchells & Butlers – to warn of rising costs and disappointing sales.
In Fuller’s AGM trade statement at the time, Emeny said, “The pressure on industry-wide inflationary costs around food supply, labor and especially energy shows little sign of abating.”
Peel Hunt analysts lowered their price target for Fuller’s stock from 750p to 700p on Tuesday.
They said: ‘The sales recovery from Covid-19 is slow. If Friday’s budget includes a VAT cut, today’s cuts can be reversed. Our buying advice is largely based on the long-term value of real estate.’