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Pub chain Fuller's faces £10m rise in energy costs

Analysts say Friday's Truss administration's mini-budget could ease some of the cost difficulties facing Fuller's.

Pub chain Fuller’s warns it faces a £10m rise in energy costs as it tries to recover from Covid-19 closures

  • Fuller’s full-year gas and electricity costs will hit £18m, up from £8m
  • He told investors that he is currently promoting energy and cost saving measures.

Fuller, Smith & Turner will pay an additional £10m in gas and electricity costs this fiscal year as a result of the current energy crisis.

The pub chain told investors on Tuesday that it is facing “significant increases” in costs, and has bought additional forward contracts to cover its forecast gas and electricity needs for the year.

While stressing that the benefits of the government’s recently announced energy support scheme for businesses are still unknown, Fuller said he now expects gas and electricity costs for the full year to hit £18m compared with £8m. last year.

Fuller added that it has made progress in implementing cost-saving initiatives and will introduce more schemes to “help mitigate these cost increases in the medium term.”

Chief Executive Simon Emeny said: ‘Companies in the hospitality sector are experiencing unsustainable increases in energy costs.

‘Despite having proactively purchased term contracts to limit the impact on Fuller’s, we will see significant increases this year and we urge the Government to provide much needed clarity on its proposed support package so we can plan accordingly.

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“We are looking forward to the next World Cup and our first unrestricted Christmas in 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, property and financial muscle to deliver consistent long-term returns.”

Shares of Fuller, Smith & Turner fell 2 percent to 498 pence in afternoon trading. They are down 33.8% so far in 2022 and down 58.2% from their August 2019 peak.

The group also reported Tuesday that in the first 25 weeks of the fiscal year they were up 3 percent from pre-pandemic levels and 50 percent higher than the same period last year.

In July, the firm joined two other British pub operators, Marston’s and Mitchells & Butlers, in warning of spiraling costs and weaker-than-expected sales.

In Fuller’s AGM trade statement at the time, Emeny said: “Industry-wide inflationary cost pressures around food supply, labor and particularly energy are showing few signs of abating.”

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Analysts at Peel Hunt lowered their price target for Fuller shares from 750 pence to 700 pence on Tuesday.

They said: ‘The sales recovery from Covid-19 is slow. If Friday’s budget includes a VAT cut, today’s cuts could be reversed. Our Buy recommendation is based largely on long-term property values.’

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