Britain's largest pub chain loses market punch
Date:2008/09/04 Source:
PUNCH Taverns Plc, the largest pub owner in the United Kingdom, yesterday fell the most in three weeks in London trading after scrapping its dividend to conserve cash and reporting lower annual sales.
Punch slid as much as 15 percent, wiping about 123 million pounds (US$218 million) off its market value and extending this year's drop to 65 percent. The stock was down 39.75 pence, or 13 percent, at 277 pence yesterday morning, posting the second-biggest decline in the 665-company FTSE All-Share Index.
Revenue and profits are under pressure across the industry as last year's English ban on indoor smoking, a slowing economy and supermarket discounts on beer discourage Britons from going out to pubs. Punch said it will not pay a second-half dividend so cash can be used to keep up payments on convertible bonds due in 2010.
"Punch considers that the certainty of paying its convertible bond is more important than paying a dividend," Tej Randhawa, an analyst at Merrill Lynch in London who advises buying the company's stock, said in a research report.
Omitting the payout will save 29 million pounds based on a dividend of 11 pence a share, said Bloomberg News.
Pub companies accounted for the four biggest declines in the FTSE 350 Travel & Leisure Index yesterday.
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