Shepherd Neame returns to profit

The owner and operator of over 300 pubs across Kent and the South East reported profit before tax of £7.4m, up from a loss of £16.4m in 2021, while earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to £23.4m from £7.7m in 2021.

Like-for-like (lfl) sales were driven by accommodation (up 25% on 2019) and the brewing and brands business (up 7% on 2019). However, lfl sales for food were down 1% on 2019, and down 16% on 2019 for drink.

Retail lfls were down 8% on 2019 across the estate, primarily due to a 30% drop at the 25 pubs and hotels within the M25. The 38 pubs and hotels outside the M25 saw retail lfls up 1% on 2019, with near normal footfall outside London and strong footfall in the coastal estate.

The operator’s 231 tenanted pubs saw lfl income up 1% on 2019.

In addition, trading was encouraging over the summer, with retail lfls level with 2020 and up 9.4% on the 2022 financial year in the 13 weeks to 24 September, according to the update.

Tenanted pub lfl income rose by 2.9% vs 2020 and 12.8% vs 2022 in the 13 weeks to 24 September.

During the year, Shepherd Neame acquired four pubs for £6.7m. According to the update, the business has fixed energy price contracts at below market rate, through 2024 for the brewery and March 2023 for retail pubs.

Net debt excluding lease liabilities has returned to pre-pandemic levels, allowing for the resumption of investment in the existing estate as well as new pubs, according to the update.

The operator further reported demand is 'encouraging' and that the business 'is in good shape' despite a challenging short-term outlook.

CEO Jonathan Neame said: “Shepherd Neame has rebounded well from the challenges of the last two years - a testament to the strength of the business model and depth of talent across the business.

“The company has strengthened its balance sheet through tight cash management and net debt reduction and continues to evolve operationally to meet changes in the market.

“Our business is in good shape and has tTraded well through the summer. Whilst we are cautious about the winter ahead and the inflationary environment, we retain an optimistic view for the business and continue to seek investment and acquisition opportunities for the long term.”