Hopes rise for Punch Tavern chief's salvage plans

Pubs firm Punch Taverns on Wednesday reported a sharp rise in sales at its Spirit managed division and said it was on track to complete a demerger by the end of the summer.

The company, which has over 6,500 pubs, said sales at its managed pubs open more than a year rose by 7.3 percent in the 12 weeks to May 28.

Punch, whose brands include Chef & Brewer, Fayre & Square and Flaming Grill, said food sales at its managed pubs were up 8.4 percent over the period with drink sales up 7.3 percent.

Average net income at Punch's tenanted pubs rose by 1.3 percent during the period.

Tenanted pubs are run by publicans who pay the company rent and rely on it for their beer supplies. Managed pubs, which have fared best during the recession, are run directly by the company and generally have greater freedom on pricing.

Punch said it was on track to meet full year expectations despite a challenging trading environment.

Market expectations for full-pretax profit range between £119.5 million and £129.5 million, with the average forecast at 124.1 million, according to a Reuters poll of 17 analysts.

Punch last month announced it intended to demerge Spirit as part of plans to reduce its crippling £3 billion debt pile. It built up its debt by making a series of highly leveraged acquisitions during the credit boom including the £2.7 billion acquisition of Spirit in 2005.