Shepherd Neame, Britain’s oldest brewer, has announced 'exceptional' trading results across it managed pub estate, but stated it faces increasingly 'challenging market conditions' for its beer.
Announcing its results for the 26 weeks to 26 December 2015, the Kent-based company said its turnover increased slightly by 0.3% to £73.7m. Managed pub like-for-like sales were up 6.5%, with liquor up 5.2%, food up 7.4% and accommodation up 11.2%. However, in the 'brewing and brands' part of the business, revenue was down -8.9% and operating profit down -54.9%.
During the period Shepherd Neame sold 131,000 brewers' barrels of beer or 37.7 million pints, including 112,000 brewers' barrels of own brewed beer (32.3 million pints). Own brands include Spitfire, Bishops Finger and Whitstable Bay. The company also brews lagers under licence, including Asahi Super Dry and Samuel Adams Boston Lager. Overall beer volume decline was 11.3%, while own beer volumes, excluding contract were up marginally at 0.1%. The business was also hit by higher water treatment costs.
On the pub side, revenue in the tenanted estate grew by just 0.3%, but operating profit fell by -1.1% due to a lower number of pubs and increased property investment. During the period, it acquired two managed pubs, but disposed of five tenanted sites and transferred six pubs from tied tenancy to free-of-tie leases. The company currently operates 335 sites ranging from pub to hotels, including 275 tenanted or leased sites, 54 managed pubs, and six investment properties held under commercial free-of-tie leases.
Shepherd Neame said the success of its pub estate was down to substantial investment in its best and largest outlets to modernise and premiumise the offer. Total cash invested in capital expenditure was £6.3m. The company raised £8.8m in property sales, which included the disposal of 10 acres of land.
Chief executive Jonathan Neame said: 'I am pleased to report that our half year results have been characterised by a sustained and strong trading in our pub business, positive operating cash flows and significant proceeds from property disposals.
'Our consistent investment in our brand and pub assets to align them to today’s consumer demand has resulted in the sustained quality and performance of the business in a highly competitive marketplace. We remain cautious about the outlook for consumer spending, however I am confident we have the right strategy to succeed and the skills to deliver it.'