Rising costs hit Wetherspoon profits
JD Wetherspoon will report lower profit before tax for the first half of its financial year as costs take their toll.
This is despite the UK pub chain reporting a like-for-like sales increase of 7.2pc, and an 8.3pc increase in total sales, according to a trading update for the 12 weeks to 20 January.
In the half year, comparable sales increased by 6.3pc and total sales by 7.2pc.
Wetherspoon said that pre-tax profit in the first half is expected to be lower than last year's £62m (€70m).
However costs are "considerably higher" than the previous year, especially labour, which has increased by about £30m (€34m) in the period.
The group, which operates a number of pubs in Ireland, added that costs had also increased in other areas, including interest, utilities, repairs and depreciation.
In addition, the company said net debt at the end of this financial year is currently expected to be around £10m (€11m) higher than the level at the last financial year end.
The company has agreed a new five year revolving credit facility of £875m (previous £820m). The new facility matures in January 2024.
Chairman Tim Martin said: "Sales growth has been strong since our last update.
"Costs, as previously indicated, are considerably higher than the previous year, especially labour, which has increased by about £30m in the period, but also in other areas, including interest, utilities, repairs and depreciation.
"Profit before tax in the first half is expected to be lower than the same period last year. Our expectations for the full year are unchanged."
The company has opened two new pubs in the first half and has closed or sold six.
It guided new openings of between five and 10 pubs in the current financial year.
Brexit-backing Mr Martin also used the update to wade into politics, arguing that one of the reasons Britain should quit the EU is because of tariffs the bloc has imposed on Cambodian rice.
(Additional reporting PA)