SA Brain sees operating profits slide by a third

Welsh brewer SA Brain has reported turnover for 2009 down nine per cent with trading hit by the sale of its drinks distribution business.

No longer selling third party products wholesale to free-trade accounts meant operating profits fell by 36 per cent to £4.7m, the result of being "impacted by disruption and carrying costs post sale of the business" to Scottish & Newcastle (S&N) last year, the brewer said.

Pre-tax profits for the year to September 30, 2009, given a boost by the sale of the distribution business, were up 77.1 per cent at £10.4m.

Earnings before interest, tax, depreciation and amortisation as a percentage of turnover rose to 14.1 per cent from 13.3 per cent.

Brains, which operates more than 250 pubs across Wales, the Midlands and the West Country, said its managed pub like-for-like sales fell 1.3 per cent. Managed house food and accommodation sales rose 10 per cent and 42 per cent respectively, it added.

The group said its beer volumes across its tenanted and leased pubs were down by 6.8 per cent.

However its national sales volumes grew 1.5 per cent, take-home volumes were up 63 per cent and overall ale volumes rose 1.2 per cent. Brains' cask ale volumes grew six per cent.

Scott Waddington, Brains' chief executive, said while it had hit turnover "the sale of the free-trade business has enabled us to fully focus on and invest in our brewing and pubs business whilst making our beer brands more widely available through Heineken UK's comprehensive distribution network".

Brains signed a deal with the then-S&N in January 2009 to distribute its beers across the UK and feed more S&N beers throughout its estate.

While recognising the tough trading environment Waddington said he was nevertheless encouraged by the performance of the group's beer volumes.

"It was difficult to grow income in the underlying business whilst again having to absorb a number of increased costs that we could do little to control.

"Nevertheless it should be noted that overall we have continued to outperform the market in several areas of the business and at least perform in line with the market in others."

The group remained cautious regarding the outlook for 2010, Waddington added, "but we remain committed to giving our customers good reasons to visit our pubs and drink our beers.

"Therefore, we intend to increase investment in the marketing of our brands and will continue to invest selectively in our pub estate."