Fuller’s tripped up by mechanics of separating beer business
Fuller Smith & Turner (FSTA) £10.20
Loss to date: 4.7%
Original entry point: Buy at £10.70, 14 February 2019
Pub and hotels group Fuller Smith & Turner (FSTA) admits that it has underestimated costs of ‘transitioning’ the beer business to Japanese brewer Asahi, which struck a deal in January to acquire the assets.
This mistake will result in full-year pre-tax profit to 28 March 2020 being flat on a comparable basis to last year at £31m.
What appears to have happened is that the migration to a new enterprise resource planning system (ERP) has taken longer to deliver benefits than anticipated, resulting in higher running costs.
The ERP issue further complicated the separation of the 174-year-old beer business, resulting in £3.4m of extra costs and the transition period extending to the end of May next year.
The impact appeared larger because analysts’ profit forecasts of £42m had gotten out of line with management expectations, which were closer to £37m.
Broker Liberum sees this event as a post-disposal ‘reset of the numbers’ rather than a profit warning.
SHARES SAYS: Don’t be put off by the setback. We believe the disposal makes strategic sense and once the current transition is complete, the group is well positioned for further growth.