Shepherd Neame warns recovery will take longer than expected

Shepherd Neame, Britain’s oldest brewer, warns rising energy costs will delay its return to pre-pandemic profit levels

  • Power shortages have in part driven much higher costs at the Kent-based company.
  • Shepherd Neame recovered to an annual profit of £6.3m in the 12 months to June
  • The company’s footprint outside of London and in coastal areas is performing relatively better

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Shepherd Neame has returned to profit, but warned that a full recovery would take “longer than originally anticipated” due to significant inflationary pressures.

Britain’s oldest brewer doesn’t expect to reach pre-pandemic levels of profitability until 2024/25, given the impact of rising gas and electricity prices on consumers.

Power shortages have in part driven significantly higher costs at the Kent-based company, as has the imposition of higher national insurance and minimum wage rates and the end of a reduced VAT rate for the energy sector. hospitality in April.

Warning: Britain's oldest brewer doesn't expect to reach pre-pandemic levels of profitability until 2024/25, given the impact of rising gas and electricity prices on consumers.

Warning: Britain’s oldest brewer doesn’t expect to reach pre-pandemic levels of profitability until 2024/25, given the impact of rising gas and electricity prices on consumers.

This did not prevent it from recovering with a profit of £6.3m in the year to June, against a loss of £17.8m in the previous 12 months, when closure restrictions forced pubs to remain closed most of the time.

Trading was buoyed by strong sales at its pubs and leased premises off the M25, which saw total revenue rise just above pre-pandemic volumes and more than double last year on a like-for-like basis.

Influx out of London and into coastal areas remained relatively buoyant amid growth in remote work and Britons going on holiday.

Demand in the capital was also affected by rigid international travel rules hampering inbound tourism and the rise of the Omicron variant that deters people from traveling to its office.

Shepherd Neame revealed that retail sales in pubs within the M25 were down 30% from 2019 levels, despite soaring 263% year on year.

Its chief executive, Jonathan Neame, said trading at city center outlets “will take a little longer” to return to pre-Covid levels, while international tourism is not expected to recover until 2024.

Recovery: Shepherd Neame chief executive Jonathan Neame (pictured) said trading at town center outlets will “take a bit longer” to return to pre-Covid levels

For next winter, Neame warned that sales are likely to slow as a result of consumers paying higher prices for energy and fuel.

These factors will also cause the company to pay more for products like glass and carbon dioxide, which is commonly used to keep beer from going stale.

However, Neame expressed confidence that the company would be able to “deal with these issues as they arise.”

He added: “While we are cautious about the coming winter and inflationary environment, we maintain an optimistic view for the business and continue to seek long-term investment and acquisition opportunities.”

In a widely criticized ‘mini-budget’ last week, Foreign Minister Kwasi Kwarteng declared that planned increases in alcohol tax rates would be scrapped, a move that could save drinkers around 7 pence on a pint of beer. .

This came shortly after the UK government announced that energy prices for businesses would be capped for six months from early October at a potential cost of up to £150bn to taxpayers.

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