Profits halved at JW Lees
The north west brewer has announced its results for the year ended 31 March 2023.
JW Lees has become the latest pub operator to reveal a hefty dent in full-year profitability, as the north west brewer announced its results for the year ended 31 March 2023.
While the business saw a record turnover for the year, with company revenues at £88m (up 16%), profits were down by 56% to £3.5m when compared to 2022. The operator puts this down to a number of reasons, including the cost of energy, reduced government support and increased levels of investment in the business.
The company chose to invest heavily in its 134-strong estate during the year, spending £8.9m on refurbishing its properties.
JW Lees had year-end cash balances of £10m and a revolving bank credit facility of £15m from NatWest, which means that the company has £25m at its immediate disposal to invest, with the funds marked for new pub acquisitions.
"It feels like we’ve been on a roller coaster since 20 March 2020, when prime minister Boris Johnson ordered all UK pubs to close – sadly some pubs have never recovered, but we are now seeing steady growth in all three parts of the JW Lees business," says William Lees-Jones, managing director of JW Lees.
Weathering the storm
With its long-term energy supply contracts coming to an end in September 2022, the company was loss-making for the second half of the year, largely owing to a rise of electricity costs of 148% and a rise in gas prices of 275%.
Since then, the company was able to move onto flexible energy contracts from March 2023 and has now hedged its energy costs going forwards until 2026.
"The government says that it recognises how important the hospitality sector is, but needs to start to think differently about how it invests in the sector," says Less-Jones. "There are so many simple things that government could do, including the long-promised root and branch review of business rates and fairer rates of both alcohol duty and VAT, which are among the highest in the world.
"The current year’s challenges include continued high energy costs and inflation. We are also starting to see the impact of the Alcohol Duty Review, which came into effect in August. While we remain keen to acquire more pubs, inns and hotels, there have been limited opportunities for us to acquire the right sites at the right price and so we are about to embark on a major investment programme in our brewery, as we approach our 200-year anniversary in 2028, as well as adding a number of new bedroom blocks to our existing pub estate."
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