Adnams sees operating profits slump 88 per cent
Adnams, the Suffolk brewer, said tough trading conditions, rising costs and delays in selling off a number of the group's pubs contributed to a near-90 per cent fall in its first half operating profits.
Group turnover in the six months to June 30, 2008 dipped marginally - 0.3 per cent to £21.878m, but operating costs rose 4.8 per cent to £21.736m.
Operating profits subsequently fell 88.3 per cent to £142,000, from £1.211m figure in the same period last year. Pre-tax losses came in at £148,000, against a £3.8m profit in the same period in 2007.
Adnams chairman Jonathan Adnams said some of the increased costs the group had incurred were planned, while some, such as rising energy and raw material costs, were beyond its control.
The market was tough enough to convince Adnams that he did not expect the group's full year operating profit "to come near" last year's £4.2m figure. He was hopeful, however, that there would be an improvement in the second half, where much of the group's trading was traditionally weighted.
"Profit numbers are a snapshot of the company, but we're looking to the future. Yes, the next 12 to 18 months will be tough but we're determined to get the company fit, leaner and lighter," he said.
Adnams said the group would "vigourously control" its cost base going forward and "could not shy away" from the possibility of job losses.
Having added to its beer sales force in the last year, Adnams conceded it may be necessary to reduce it again. The brewer employs around 320 staff, Adnams said.
"We don't want to take out too much and leave ourselves stretched. But we need to get our teams to the right size," he added.
The group continued to take a long term view and Adnams insisted the group had taken the right decisions for the business. But he conceded it had not foreseen the extent of the current downturn when it put in place its expansion plans for its Cellar & Kitchens business and beer brands.
"The world looked a different place in early 2007 when the board signed off the plans for this year," said Adnams.
"We signalled in April that things were turning downwards and things have slid quicker than we expected."
The brewer would be looking to exploit more opportunities for its beer brands in the off trade, Adnams said, while its Cellar & Kitchen concept was making slower progress than expected.
Recent efforts to sell a number of the brewer's pubs had stalled due to the scarcity of finance at the right price, Adnams believed, but a new proposal was "on the table" and he said he was hopeful - though not certain - the situation could be concluded in a matter of weeks.
