Shepherd Neame achieves ‘strong rebound’ in sales

By Georgi Gyton, MCA

- Last updated on GMT

Company results: Shepherd Neame chief executive Jonathan Neame said he was pleased to report a strong rebound in the first half of the year despite challenges
Company results: Shepherd Neame chief executive Jonathan Neame said he was pleased to report a strong rebound in the first half of the year despite challenges

Related tags: Shepherd neame, Finance, Pubco + head office, Tenanted + leased

Shepherd Neame achieved a “strong rebound” in sales in the first half of FY2021, with revenue recovering to pre-pandemic levels.

Sales were up 54.5% to £78.7m, in the 26 weeks to 25 December 2021, compared to £50.9m in H1 2021.

Underlying earnings before interest, taxation, depreciation and amortisation (EBITDA) rose to £11.3m, compared to £3.4m a year previously, while underlying basic earnings per share were 15.9p, versus a loss per share of 28.6p in the first half of 2021.

The business, which owns 302 pubs in Kent and the South East, announced it would be issuing the first dividend since October 2019, of 3.50p.

Like-for-like sales in its retail pubs and hotels division (64), were at 89% of 2020 levels, with most central London pubs near normal as people return to offices. Its 232 tenanted pubs saw like-for-like revenue at 94% of 2020 levels.

Production transfer

Within Brewing and Brands, the business saw good sales momentum with total beer volumes at +5.7% versus 2020, while its own beer volumes were -4% vs 2020.

In January 2022 it concluded a new agreement to transfer all Singha production to Faversham in phases over the next few months.

For the 13 weeks to 26 March 2022, trading at its retail pubs and hotels was at 110% of the equivalent period in 2020, while for the 9 weeks to 26 February 2022, like-for-like income within its tenanted division was at 97% of the equivalent period in 2020.

Shepherd Neame said demand was encouraging, with current performance in line with expectations.

Jonathan Neame, CEO of Shepherd Neame, said: “I am pleased to report a strong rebound in the first half of the year despite ongoing restrictions and operational challenges during the period. We are now back to pre-pandemic trading levels, have strong cash flow and have returned to profitability.”

Inflationary pressure

Neame said that while its business was in good shape and had traded well following the lifting of all restrictions, the current economic uncertainties were putting inflationary pressure on the sector which will impact margins.

“We have a robust and resilient business and a strong platform from which to build. We move forward with confidence and are pleased that we can now resume investment across our business at pre-pandemic levels. To support this we have strengthened our management team with a highly experienced and proven operator to help take the pub business forward,” Neame added.

The business recently appointed former Fuller’s MD Jonathan Swaine as its managing director for pubs, who take up his role in the summer.

“We are looking to the future with cautious optimism and are excited about delivering an uninterrupted Easter and summer for the first time in three years.”

During the course of the period, Shepherd Neame said it had generated significant cash to normalise its debt and leverage, and has paid all remaining VAT liabilities to HMRC and all deferred rent payments.

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