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News
Shepherd Neame hit by rising costs and falling consumer confidence
Profits at Shepherd Neame have been hit by rising costs and a drop in consumer confidence, the brewer and operator has revealed.
While the company reported a 7.2% increase in turnover for the six months to 27 December 2008, coming in at £52.4 million, pre-exceptional operating profit dropped 17% on last year to £5.1m.
The company operates 367 pubs in the south east of England, of which 320 are tenanted and 47 managed.
Like-for like sales at its 47 managed pubs fell 0.2% over the six month period, but did manage a successful Christmas with like-for-like sales increasing 1.8% in the 13 weeks to 28 February.
Like-for-like sales from across its 320-strong tenanted estate fell 4.1%, which chairman Miles Templeman said compares favourably with the company’s competitors.
Performance by its London-based pubs outperformed the national market, recording sales growth of 2.9% over the six months.
While beer volumes may have increased 6.7%, margins suffered after a 27% increase in the cost of raw materials on last year and a step-up in the defection from on to off-trade consumption.
Chairman Miles Templeman said: “This trend has been accelerated by further unwelcome and unjustified increases in alcohol duty in December, making the total annualised increase in 2008 +17.8%.”
Mr Templeman added that he retains confidence in the sector despite the recession. “These are challenging times and it is impossible to judge how deep and how long the recession will be,” he said.
“In previous downturns, however, beer and pubs have proved more resilient than other sectors and have picked up earlier as consumer confidence returns.”
Chief executive Jonathan Neame insisted the company had delivered strong sales performance against a difficult economic backdrop.
He added: “We anticipate the second half performance will follow the pattern of the first half. We will continue to experience high costs for the rest of the year, but expect them to start to reduce as we enter our next financial year.”
Alan Lodge 24.03.2009