Adnams has reported a “difficult” half-year, with operating profit for the six months to 30 June at £668,000 against £857,000 in H1 2012.
Turnover for the Suffolk-based firm, which said it experienced a “higher than normal number of tenancy changes” in the six months, increased from £25.7m to £26m. However, pre-tax profits increased substantially from £754,000 to £1.3m.
Chairman Jonathan Adnams said its tenanted estate “robustly” in 2011 and 2012, adding: “Most of our pubs continued to do well in the first half of this year, but a small number found the conditions too difficult and we experienced a higher than normal number of tenancy changes. Two important pubs were closed for several weeks when their lessee became insolvent. Whilst we hope to appoint a new licensee soon, one of these remains closed.
“We are in the process of selling a number of smaller outlets as we continue to restructure our pubs business to preserve its success. We completed two pub sales in the first six months: the Oyster at Butley and the British Grenadier in Colchester.
“We remain interested in adding good new pubs to our estate, but we are careful about what we buy and the right property at the right price has not come our way so far this year.”
Own-beer volumes fell 2% , with volumes of Bitburger Pilsner down 8%.
Adnams said its directly delivered free trade had a strong first half in 2012. “In 2013 we held our beer prices for the fifth successive year, in support of the UK on-trade, but despite this we saw a small decline in volumes in a very competitive market. Part of the challenge comes from successful and important customers being bought by competitors. Part also comes from a continuing strong growth of smaller brewers.”
He added: “The take home beer business represented a bright spot in the first half of this year and has continued the good growth that we saw in the last two years, with volumes up by a further 25%. Industry data shows that the long-term trend towards drinking at home rather than drinking in pubs has reasserted itself this year and this trend has been very marked in our own results.”
Sales and profits grew at its hotels. “Occupancy levels were generally improved though it was harder to maintain room rates. We had the advantage this year of a full six months trading for the newly refurbished rooms at the Crown. This year we have been investing in the Swan and the upstairs Reading Room has been turned into a very attractive venue for meetings and for guests to sit comfortably and work or relax in peaceful surroundings.”
Volumes of its spirits business grew 27% and Adnams said it will release its first whiskies on 5 December, in time for Christmas trade.
Turnover in the wine and shops business fell 1.7%, although like-for-like sales were up 0.6%. However, costs savings achieved following a business reorganisation last year meant the bottom line was improved.
“There have been minor changes in our portfolio of shops since last year. We closed the Spitalfields shop last autumn and we opened the Norwich shop at the end of May last year. Having opened our own Norwich shop we closed the concession that we had in the House of Fraser store in Norwich in January this year.”
Adnams said it also saw a “good performance” from its mail order and web businesses over the last six months. “There is a long-term shift in our business, as with many others, away from traditional mail order and towards web sales, but with a strong seasonal cellar offering and with en primeur wine sales our mail order business has had a good six months alongside a growing web business which has become important for sales of hotel rooms and brewery and distillery tours as well as Cellar & Kitchen products.”
The company sold the Southwold Arms in Southwold, which closed more than 10 years ago and had been used for staff accommodation for its hotels business.
Bank debt at 30 June was £14m, against £15.9m on 30 June 2012 and £13.7m at the last year end.
Adnams said: “This was a tough first half for our business and the fundamental trends within the beer industry seem unlikely to change, though we did experience an unusually disrupted period within our tied estate in the first half of the year.
“However, as I write in mid-July we are enjoying some long awaited better weather and we believe that we are doing many of the right things to ensure our long-term sustainable success. We have built an enviable consumer brand backed by first rate products and customer service.
“Adnams has many great strengths, a deep-rooted culture of taking a longer-term view, a strong vein of innovation, and a values base that supports us through harder times. We will continue to seek to do the right things and deliver value to all our stakeholders.”
