Update: Adnams hails ‘good year’ as sales and operating profits climb
PUBLISHED: 09:12 28 March 2012 | UPDATED: 14:01 28 March 2012
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THE chairman of Suffolk brewing and leisure retail company Adnams today hailed a “good year” for the company as it posted increased underlying profits for 2011 despite a challenging economic climate.
Turnover across the Southwold-based company’s businesses for the year to December 31 grew by 7.2% compared with 2010, from £50.912million to £54.570m, and operating profit before exceptional items was 2.8% higher, at £3.277m against £3.188m.
At the bottom line, pre-tax profit fell from £2.818m to £1.299m, reflecting £1.7m of provisions for property write-downs and closure costs in relation to changes in its retail business, which were partly off-set by a reduction in interest charges.
However, in view of the improved operating profit, the final dividend will be increased from £1.22 to £1.25 per share.
Company chairman Jonathan Adnams said: “The Adnams business enjoyed a good year in 2011, in continuing difficult economic circumstances.”
A 7% increase in beer volumes was particularly pleasing, he said, with the figure including a 2.7% increase in cask beer against the background of a fall of around 2% in the overall cask market.
Growth had been driven by Adnams’ good relationships within the trade and the quality of its beer offer, including the launch during the year of Ghost Ship which had been “a star performer” and would now become a permanent part of the company’s range.
Sole Star, the low alcohol beer launched towards the end of the year, had also been well received, as had the return of Old Ale, which was named Champion Beer of East Anglia.
Mr Adnams added that the company was pegging its beer prices at the same level for a fourth consecutive year, to help keep down prices at the pump despite continued increases in beer duty by the Chancellor.
The company’s pubs had a successful year, with profit per pub rising by 15%, but conditions proved tougher for its hotels, particularly The Swan, with profits slightly down on 2010.
Mr Adnams said the hotels’ core customer base may have been particularly affected by the squeeze on disposable incomes, making a weekend away in Southwold less affordable.
The slowdown in bookings had continued into the spring so far this year, he added, although the reopening of The Crown following refurbishment of its bedrooms and provided a lift.
Sales at the company’s Cellar & Kitchen shops grew by 16% in total and 13% on a like-for-like basis.
Three new Cellar and Kitchen stores were opened during the year in Spitalfields and Bloomsbury in London, and at Peterborough, and the Holt store in Norfolk was relocated, with better premises having become available.
The impairment charges include the closure of the Richmond store in London, which took place in January, just after the year-end.
The Norwich store, a “pop-up” shop which was never intended to be permanent, also closed during the year, although Mr Adnams said the company hoped to announce the opening of a new store in the city in the next month or two.
He added that the first full year of trading for the company’s distillery had also proved a success, with its products receiving a number of awards, although it remained a small part of the overall business.
Mr Adnams added: “As ever, I am immensely proud of the work we have done throughout the year with our communities. The Adnams Charity, now in its 21st year has awarded over £800,000 to good causes within a 25-mile radius of Southwold during this time.
“We continue to support a wide variety of local and national events from Suffolk Dog Day to the Tour of Britain cycling event. Our own Adnams 10k run in Southwold now attracts over 700 people and has become a firm fixture in our calendar and we were delighted to welcome back Olympic legend Steve Cram once again in 2011.”
Looking ahead, Mr Adnams said that economic uncertainty was greater now than at any recent time, but he insisted that the business would retain its long-term focus.
“Despite sounding a note of caution about economic uncertainty, our response to the current conditions is to keep an eye on costs, but we will not be distracted from our long-term goals and will continue to invest for the future,” he said.
And although the outlook for trading remained challenging, the Jubilee and the Olympic Games could help to deliver a much-needed “feelgood factor” later in the year, he added.