Fuller, Smith & Turner is set to pay an additional £10million 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 it has purchased additional forward contracts to cover its forecast gas and electricity requirement for the year.
While it stressed the benefits of the Government’s recently announced energy support scheme for businesses are still unknown, Fuller’s said it now expects full-year gas and electricity costs to come in at £18million compared to £8million last year.
Analysts say the Truss government’s mini-budget on Friday could ease some of the cost difficulties Fuller’s is facing
Fuller’s added that it has made progress on implementing cost-saving initiatives and will introduce more schemes to ‘help mitigate these cost increases over the medium term’.
Chief executive Simon Emeny said: ‘Businesses across the hospitality sector are experiencing unsustainable increases in energy costs.
‘Despite having proactively purchased forward contracts to limit the impact on Fuller’s, we will see significant increases this year and do urge the Government to provide much needed clarity on its proposed support package so that we can plan accordingly.
‘We are looking forward to the forthcoming World Cup and our first restriction-free Christmas for three years. The future may present more obstacles to navigate, but Fuller’s is a long-term company with a clear vision and the people, properties, and financial fire power to deliver consistent returns in the long term.’
Fuller, Smith & Turner shares were down 2 per cent to 498p in late afternoon trading. They are down 33.8 per cent so far in 2022 and 58.2 per cent off their August 2019 peak.
The group also reported on Tuesday that in the first 25 weeks of the financial year were up 3 per cent against pre-pandemic levels and up 50 per cent on the same period last year.
In July the firm joined two British other pub operators – Marston’s and Mitchells & Butlers – in warning of spiralling costs and weaker-than-expected sales.
In Fuller’s AGM trading statement at the time, Emeny said: ‘The industry-wide inflationary cost pressures around food supply, labour and particularly energy are showing little signs of abating.’
Analysts at Peel Hunt cut their target price for Fuller’s shares 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 downgrades could be reversed. Our Buy recommendation is largely based on the long-term property values.’
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