Punch Taverns to sell 1,300 more pubs

Punch Taverns will sell another 1,300 pubs after announcing losses of £160m. The group said that last year it sold just under 900 pubs which it believes will not survive the recession and changing consumer habits. It has identified a "core estate" of 4,700 leased pubs out of its remaining portfolio of 6,770 which it believes have a sustainable future. Its portfolio includes 800 directly-managed pubs which will not be sold. It said: "Whilst we remain committed to the future of the British pub, we believe that fundamental change in consumer habits will result in some pubs not surviving." Shares in the group fell by over 10% in early morning trading after posting the results. New chief executive Ian Dyson, who quit as finance director of Marks & Spencer in May after being overlooked for the top job , said he was launching a review of the group's strategy. Pre-tax profits excluding exceptional charges such as the £218m writedown of the value of its pub estate were £131m, almost a fifth lower for the year ending in August compared with 2009 and slightly below analysts' expectations. Punch leases the majority of its pubs to landlords who pay the group rent and rely on it for beer supplies. Core earnings at these pubs fell by 11% last year. The group said that takings at the few pubs it directly manages had picked up in the last 12 weeks by 2.6% but overall were down 2% for the year. Pub groups such as JD Wetherspoon and Mitchells & Butlers are faring better through the recession because unlike Punch they directly manage all their pubs, so have more freedom to cut prices, partly because of their purchasing power as larger centralised operators. Punch said it was now spending just under £2m each month supporting its leased pubs through rent concessions and special discount schemes, up by a third from last year. Pubs in the UK have been severely hit by the impact of the recession, beer duty hikes and cheap booze offers from supermarkets. Last year it sold 893 of "non-core pubs" and other non-core assets raising £299m , just below its target of £300m for the year, helping reduce its net debt by £322m to £3.14bn. Most of Punch's debt relates to the £2.7bn acquisition of rival Spirit Group in 2007, just before the onset of the recession. Dyson said: "While we have been encouraged by more recent trends in both the leased and managed businesses, the economic environment is very difficult and there remains room for improvement across all aspects of our business."