Shepherd Neame, the regional brewer and pub operator, has not escaped the effects of what the pub industry has dubbed “a perfect storm”.
Unveiling interim results, the company – led by Jonathan Neame – said its profits had been squeezed by rising input costs and softer consumer demand. Pre-tax profits dipped 2.3% to £4.7m.
The Kent-based firm, which is among Britain’s oldest companies having been established in 1698, said many of the pub groups that it supplies its range of beers to had suffered a downturn in trade in the six months to 29 December through a combination of weak consumer confidence, the smoking ban, and the wet weather in the summer of 2007.
It said that this had been compounded by the winter months, which had proved more challenging than it had anticipated.
In his interim statement, chairman Miles Templeman said: “In spite of this, I am pleased to report that the business has proved resilient to these difficult conditions.”
Like-for-like sales in its 49 managed houses fell 1.7% overall, held up by a strong performance at its London pubs, where like-for-like sales grew 6.3%.
Total food sales at its managed pub business increased by 7.3%, while total accommodation sales – the company has 226 bedrooms within the division – improved by 11.2%.
It said that like-for-like profits at its 323-strong tenanted arm were positive, up 0.6%.
Total volumes in its brewing division, which makes a range of ales including Spitfire and Bishops Finger as well as a clutch of lagers under licence, were marginally down against an on-trade beer market down 7.2%, it said.
The group warned that further increases in utilities and input costs would add further pressure to its brewing operations in the second half.
Jonathan Neame, chief executive, warned that the current conditions were likely to prevail in the second half. During the first half it three freehold pubs for £2.9m for its tenanted arm and the hotel for its managed operations.
It sold three pubs for £1m and further disposals were planned. It also said that extensive upgrades to its brewing plant would be completed in the second half.
Sales in the 26 weeks rose 3.7% to £52.4m, with operating profits after exceptional items up 0.7% to £5.7m.
