Young's fights on

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Brewer battles tough market conditions. By Mark Stretton.London brewer and pub operator Young's described the trading conditions of last year as some...

Brewer battles tough market conditions. By Mark Stretton.

London brewer and pub operator Young's described the trading conditions of last year as some of the toughest ever.

Unveiling results, the company, based in Wandsworth, London, said: "It is hard to imagine a more challenging set of market conditions than those that faced the business during the past year."

All but 30 of Young's 207 pubs are located within the M25 motorway that surrounds the capital.

"London is affected heavily by job losses and tourism, our insurance premiums went up by £500,000 last year, we had loads of rising costs like the minimum wage," said chief executive Pat Read. "I would describe it as an extremely robust performance in an incredibly tough year."

The company said it would cast an eye across Porter Black, the managed house business that was placed in receivership last week.

Young's tempered this by saying that "in many cases current price expectations for pubs of the quality we seek are unrealistically high".

Young's unveiled full-year profits up 6.1 per cent to £9.4m on sales of £107.8m.

In the 123-strong managed division, profits rose by 2.9 per cent despite flat sales. The company said that reduced tourism, job losses in the City plus economic and political uncertainty had affected trading conditions through the year. Like-for-like sales were down 0.2 per cent.

The company now operates 355 letting rooms within its managed estate, after adding 19 from the acquisition of Dunstan House and the development of the Rose and Crown in Wimbledon Village.

Profits in the tenanted business increased by 3.1 per cent, aided by the transfer of nine pubs from managed to tenancy. "As costs go up it makes the bottom end of the managed estate more marginal - you have to take more and more money to justify running a managed pub," said Mr Read.

The company plans 13 more switches this year, with many of the managers set to become tenants.

The company spent £16.5m in the year. Of this, £7.3m was spent buying and developing new sites, £6.5m on the existing estate and the rest was spent on improving the brewery.

Young's Bitter volumes were up 6.6 per cent, Waggledance climbed 8.5 per cent and Winter Warmer jumped 21.2 per cent. Export volumes fell 4.6 per cent, largely due to a weakening US beer market.

Sales and marketing director Stephen Goodyear will succeed Mr Read at the helm of the company. Mr Read retires after 35 years at Young's.

The company also announced a £13.3m deficit in its pension fund. "This is not something we are losing sleep over nor should it be something that Young's employees worry about," said finance director Peter Whitehead.

"We have a balance sheet of £150m and this deficit is in FRS17 accounting terms."

Young's results at a glance