Arkell's decline in profit and turnover continues

Profits before exceptional items and tax fell 25.4% to £1.79m, the fourth consecutive year of decline. A fall in rents, sales and gross margin were cited among the reasons. Retained profit fell below £1m (£0.92m) for the first time in recent years (2010: £1.14m).

The decline came despite the company reducing overheads by £400k and increasing beer sales by 3.3%.

Turnover fell 6% to £18.15m, primarily due to a reduction of £1.1m in managed house sales after five pubs were transferred to tenancy, Arkell’s pointed out — the company operates c.100 pubs.

Chairman James Arkell said: “Making that extra money (or regaining our past profits) seems to elude us, however much effort we put in and it is harder now than ever before. Higher utility costs and taxation combined with lower gross margins have stripped away profits.

“Cost savings are getting more difficult even though sales volumes are weaker.

However, we have a strong top end pub estate as well as an efficient brewery all in one site.”

The company said it would continue to sell “poor performing pubs” and would add sites “if attractive opportunities arise”. Last month Arkell’s bought two sites from Enterprise Inns: the Fox and Hounds, Haydon Wick, Swindon, and the King’s Arms Hotel, Malmesbury, both in Wiltshire.

Profits after tax and exceptional items fell 14.3% to £1.52m. Arkell’s made £94,000 profit on the sale of property, mitigating a £33,000 loss on shares in a local electrical contractor.