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the Investment column: Wolves & Dudley

Monday 24 May 1999 18:02 EDT
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Wolves & Dudley

WOLVERHAMPTON AND DUDLEY, the brewer of Heineken in the UK, is a conservative leisure company. Its pounds 50m capital expenditure budget is to pay for a roll- out of its Pitcher and Piano and Varsity bars, although only seven new sites have been planned. Finance director Ralph Findlay says the group's expansion is cautious because it is still learning about the dynamics of the brands.

The expansion is the key to Wolverhampton's growth strategy - it is spreading its reach beyond its traditional heartlands of the North, the Midlands and Wales. In the meantime, Wolverhampton offers investors the diversity and solidity of the larger leisure groups without the expensive rating.

Yesterday's results were a bit of a mixed bag. Tenanted pubs suffered a 6 per cent fall in sales on a like-for- like basis, while community pubs fell 0.6 per cent. However, the brewing and wholesale division enjoyed a 6 per cent hike in sales thanks to its Banks and Pedigree brands. Brewing margins grew from 13.4 per cent to 15.7 per cent. The forecast is for pre-tax profits of pounds 72.5m and earnings of 72.5p in 2000. The shares gained 19.5p yesterday at 564p giving them a forward p/e of just 7.7, under half that of the likes of Bass. How refreshing. Buy.

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