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

Analysts say the Truss government's mini-budget on Friday could ease some of the cost woes Fuller faces

Pub chain Fuller’s warns it faces £10m rise in energy costs as it tries to bounce back from Covid-19 lockdowns

  • Fuller’s annual gas and electricity costs are expected to reach £18m, up from £8m
  • He told investors that he is currently implementing energy and cost saving measures

Fuller, Smith & Turner is expected to pay an additional £10 million in gas and electricity costs this financial year due to the current energy crisis.

The pub chain told investors on Tuesday it was facing “significant increases” in costs and had purchased additional futures contracts to cover its projected gas and electricity needs for the year.

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

Analysts say the Truss government's mini-budget on Friday could ease some of the cost woes Fuller faces

Analysts say the Truss government’s mini-budget on Friday could ease some of the cost woes Fuller faces

Fuller added that he has made progress in implementing cost reduction initiatives and will introduce more programs to “help mitigate these cost increases over the medium term.”

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

“While we have been proactively buying futures to limit the impact on Fuller, we will see significant increases this year and urge the government to provide much-needed clarification on its proposed support package so that we can plan accordingly. .”

“We are looking forward to the next World Cup and our first unrestricted 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, properties and financial firepower to deliver consistent long-term returns.

Shares of Fuller, Smith & Turner were down 2% at 498p late in the afternoon. They are down 33.8% so far in 2022 and 58.2% from their peak in August 2019.

The group also reported on Tuesday that in the first 25 weeks of the fiscal year, it was up 3% from pre-pandemic levels and 50% from the same period last year.

In July, the company joined two other UK pub operators – Marston’s and Mitchells & Butlers – in warning of soaring costs and lower than expected sales.

In Fuller’s AGM business statement at the time, Emeny said, “Inflationary industry-wide cost pressures around food supply, labor and particular energy show few signs of slowing down.”

Peel Hunt analysts cut their target price for Fuller shares from 750p to 700p on Tuesday.

They said: “The recovery in sales from Covid-19 is slow. If Friday’s budget includes a reduction in VAT, today’s downward revisions could be undone. Our buy recommendation is largely based on long-term property values.

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