Pubs up, beers down, as Shepherd Neame prepares for £2.6m Budget costs
Shepherd Neame pubs have performed strongly in its latest financial results.
The pubs division of Kent and south east operator and brewer Shepherd Neame has performed strongly in its latest financial results.
Overall, revenue for the business was £85m for the 26 weeks to 28 December 2024. This decrease of -4.5% compared to £89m generated in H1 2024 is a result of lower revenue in the brewing and brands business. Its pubs division had a positive six months.
Underlying operating profit was £7.3m (H1 2024 £6.8m), an increase of +7.4%. Statutory profit before tax was up at £4.3m (H1 2024 £1.1m). Underlying profit before tax was £4.2m (H1 2024 £3.8m), an increase of +9.9%.
"This has been a strong period for the company with good profit growth over the prior year," says CEO Jonathan Neame. "We have been building steady momentum over the last 12 months, as product cost inflation eased and consumer confidence started to improve. As a result of the Budget, we now face new and unwelcome cost increases in National Living Wage (NLW) and National Insurance Contributions (NICs), and will adapt accordingly."
Based on the increases in NLW and NICs, Shepherd Neame says the annualised impact of these two items is £2.6m, with the incremental costs commencing in April and impacting the final quarter of its 2025 financial year.
Pub and beer performance
Shepherd Neame operates 290 pubs, of which 221 are tenanted or leased and 67 are retail. Two are operated on a free-of-tie basis as investment
properties. A total of 246 of are freehold.
Divisional revenue in its retail pubs was up 2.0% at £42.3m, and divisional underlying operating profit was up 3.6% at £5.5m.
Revenue in the tenanted pubs was up 2.7% to £18.2m with a flat underlying operating profit of £6.6m.
Shepherd Neame says its beer and brewing division continues to evolve in the face of challenges in the marketplace, shifting away from its historically strong categories of cask beer and premium bottled ales.
It says it is now planning to invest in its brand portfolio and that it has some "exciting designs in development".
Total beer volume was down by 12.6%, as the division saw a decrease of 18.4% on lower volumes to £23.8m (H1 2024 £29.2m), but
divisional underlying operating profit improved to £0.6m (H1 2024 £0.2m), as it shifted the focus of the business towards local on-trade.
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