Adnams reports 'difficult' half-year and tenancy issues

Turnover for the Suffolk-based firm, which said it experienced a “higher than normal number of tenancy changes” in the six months, increased from £25.7m to £26m. Pre-tax profits increased substantially from £754,000 to £1.3m.

Chairman Jonathan Adnams said its tenanted estate performed “robustly” in 2011 and 2012, adding: “Most of our pubs continued to do well in the first half of this year, but a small number found the conditions too difficult and we experienced a higher than normal number of tenancy changes.

"Two important pubs were closed for several weeks when their lessee became insolvent. Whilst we hope to appoint a new licensee soon, one of these remains closed.

"We are in the process of selling a number of smaller outlets as we continue to restructure our pubs business to preserve its success. We completed two pub sales in the first six months: the Oyster at Butley and the British Grenadier in Colchester.

"We remain interested in adding good new pubs to our estate, but we are careful about what we buy and the right property at the right price has not come our way so far this year.”

Bright spot​

Own-beer volumes fell 2%, with volumes of Bitburger Pilsner down 8%. Adnams said its directly delivered free trade had a strong first half in 2012. “In 2013 we held our beer prices for the fifth successive year, in support of the UK on-trade, but despite this we saw a small decline in volumes in a very competitive market.

"Part of the challenge comes from successful and important customers being bought by competitors. Part also comes from a continuing strong growth of smaller brewers."

He added: "The take home beer business represented a bright spot in the first half of this year and has continued the good growth that we saw in the last two years, with volumes up by a further 25%. Industry data shows that the long-term trend towards drinking at home rather than drinking in pubs has reasserted itself this year and this trend has been very marked in our own results.”

Volumes of its spirits business grew 27% and Adnams said it will release its first whiskies on 5 December, in time for Christmas trade.

Disrupted period​

The company sold the Southwold Arms in Southwold, which closed more than 10 years ago and had been used for staff accommodation for its hotels business. Bank debt at 30 June was £14m, against £15.9m on 30 June 2012 and £13.7m at the last year end.

Adnams said: “This was a tough first half for our business and the fundamental trends within the beer industry seem unlikely to change, though we did experience an unusually disrupted period within our tied estate in the first half of the year.

“However, as I write in mid-July we are enjoying some long awaited better weather and we believe that we are doing many of the right things to ensure our long-term sustainable success. We have built an enviable consumer brand backed by first rate products and customer service.”