Adnams positive despite lower profits

SOUTHWOLD-based Adnams said yesterday it was “well positioned” to take advantage of economic recovery when it comes - despite announcing sharply reduced profits for 2008 and warning of another tough year ahead.

SOUTHWOLD-based Adnams said yesterday it was “well positioned” to take advantage of economic recovery when it comes - despite announcing sharply reduced profits for 2008 and warning of another tough year ahead.

The brewer and leisure retailer reported an annual operating profit of �1.521 million, down from �4.206 million in 2007.

Turnover dipped from �47.368 million to �47.065 million while operating costs grew from �43.162 million to �45.544 million.

Adnams said the figures had been affected by a weakening in the beer market (with total on-trade down by 9.3%), a general softening in consumer confidence and the effect on pubs of “regulatory and lifestyle changes”.

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The company's wine business had also been hit by the decline in the value of the pound against the euro, it added.

At the bottom line, Adnams' pre-tax profits were down even more sharply, at �1.327 million against �7.455 million, although the difference largely reflected a one-off gain of �3.9 million on the sale of pubs during 2007.

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Adnams added that its balance sheet remain strong and it remained “highly cash generative”. There will be a final dividend of �1.22 per share, unchanged from 2007.

At last year's half-way stage Adnams reported a pre-tax loss of �148,000, against a profit of �3.8million at the same stage in 2007.

Executive chairman Jonathan Adnams said yesterday that the weighting of the company's business towards the second half obscured a further deterioration in trading conditions during the second half.

However, action taken to mitigate the impact of the economic downturn had begun to kick-in during the second half and there were signs of the decline at least starting to level out.

“It is nothing to shout 'hurrah' about and it will be another tough year ahead but we are remaining true to our values and have been investing for the long term,” said Mr Adnams.

This included continued brand innovation, such as East Green, the country's first carbon-neutral beer, followed later in the year by two more new beers, Lighthouse and Gunhill, and the opening of a new flagship Cellar & Kitchen store in Southwold.

Since the year, Adnams had also purchased three top quality pubs from Punch Taverns - the Maybush at Waldringfield, the Butt & Oyster at Pin Mill and the Ship at Levington - representing the first pubs bought by the company since 2001.

Mr Adnams continued: “Over the past few years we have successfully repositioned Adnams to meet those challenges and have invested in the business to provide the foundations for sustainable growth.

“We have developed and launched our award-winning Cellar & Kitchen stores, which have great potential for the future and provide a new stream of earnings for the company. We have also invested heavily in our brand, our staff and in our infrastructure. These actions have given us a powerful position for the future but have impacted the short term profitability of the business.”

Mr Adnams added: “We have had many successes throughout 2008, including a number of national awards recognising excellence in retailing, great products and efforts to reduce our impact on the environment.

“In the first quarter of 2009 we have supported pubs by freezing Adnams beer prices throughout the year. In the last few weeks we have added three stunning Suffolk pubs to our estate and were delighted to receive the inaugural Corporate Social Responsibility award at the Publican Awards. When the time comes, we believe Adnams is well positioned for the economic revival.”

n Adnams is marking National Cask Ale Week with the revival of Adnams Extra, which was Champion Beer of Britain in 1993 but has not been brewed for the last 12 years.

Adnams invests in vehicle fleet - page 12

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