It is thought Punch Taverns, one of the UK's largest pub operators, will sell as many as 2,000 of its poorest pubs over the next few years as it continues to seek ways of cutting debt and improving performance.
The group recently faced calls from one of its biggest shareholders, Schroders, to sell all 7,600 of its pubs. It has in the year to August disposed of 800 pubs, realising £414m, and expects to sell a further 640 in the current year, raising another £200m.
The move helped Punch reduce its net debt by just over £1bn to £3.47bn and the continuing sale programme, together with the remaining proceeds from a £375m equity fundraising, could allow it to shave another £500m from its debt burden in the current year.
Although Punch Taverns’ financial situation has sparked fears over its ability to survive, chief executive Giles Thorley told UK national newspaper The Times that the company had taken all the steps necessary to "deliver a return to long-term sustainable growth and value."
He added: "We’ve dealt with the big issues on the balance sheet. Underneath is a very high quality business committed to becoming best in class."
Although 275 of its 6,840 leased pubs are now closed, Thorley insisted that the rate of decline in the division had stabilised with underlying profit per pub down by 11 per cent.
Punch spent £1.6m a month helping struggling licensees to weather the storms and it expects to invest a similar level during the current year.
The margin decline in the 835-pub managed division has also slowed, with like-for-like sales down by 0.6 per cent in the second half of the year, an improvement on the 2.3 per cent fall in the first half.
Despite the cash squeeze, Thorley is hopeful that between £45m and £50m will be invested over the next three years - improving the estate and developing new concepts. In the year to August 22, pre-tax profits before exceptionals fell from £262.3m to £160.4m from turnover down from £1.56bn to £1.44bn. Exceptionals totalled £566.1m.
