The brewer, distiller and pub operator added it “has worked extremely hard during the year to mitigate inflation, control expenses, manage cash flows and serve customers well” in its results for the 12 months ended 31 December 2022.
Key figures in its report include turnover at £64.2m (2021: £57.4m), operating loss at £1.2m (2021: £0.9m), beer volume growth of 2.7% versus 2021, positive EBITDA (earnings before interest, taxation, depreciation and amortisation) of £2.7m and net bank debt of £13.9m (2021: £11m).
Chairman Dr Jonathan Adnams OBE said a year ago he hoped the two years of pandemic were behind us but the Russian invasion of Ukraine had knock-on effects for global energy and commodity prices with the UK “profoundly impacted”.
He said: “This, along with the instability brought about by the autumn mini-budget, rising interest rates and industrial unrest, has led to consumer confidence levels being at their lowest for decades.
“It is no overstatement to suggest that, for the company and the wider brewing and hospitality sector, the business environment has been at least as challenging as during the Covid-19 pandemic.
“In the final nine months of 2022, the business has had to absorb a £4.9m increase to its costs base driven by rising prices. The business has worked extremely hard during the year to mitigate inflation, control expenses, manage cash flows and serve customers well. However, it has had no alternative other than to pass most of the increased costs through to customers.”
He said the challenge for Adnams and the sector as a whole is to ensure that the increased costs of going out are met with an experience the customer values and feels compelled to repeat even during a cost-of-living crisis.
“As the company emerged from the pandemic, it needed to catch up on a property maintenance deficit and this has been the principal driver behind borrowing increasing by £2.9m to £13.9m as we invested in the long-term fabric of our buildings,” he added.
Signs of recovery
“In the early months of 2022, there were signs of recovery following a 55% fall in the previous two years and customers were clearly pleased to be visiting pubs and bars again throughout our heartland and London.”
But by mid year, he said the beer market had begun to plateau and customer sentiment begin to move from a broadly positive stance to concerns about inflation and the cost of living.
However, the group has enjoyed continual growth of its Ghost Ship 0.5% beer and it has won numerous awards.
Adnams also announced a number of board changes, including the departure of Bridget McIntyre who retired as a non-executive director of Adnams on 31 December 2022 after nine years to be succeeded by Simon Townsend, former CEO of Ei Group.
Nicky Dulieu will also retire as a non-executive director after nine years to be succeeded by Sacha Berendji while Guy Heald will retire as a non-executive director after joining the board in April 2015 with the suggestion of being succeeded by his son, Andrew Heald.