Shepherd Neame warns of PS2.6 million budget hit, plans price hikes
Shepherd Neame Ltd on Wednesday reported ‘strong’ profit growth for the first half of its financial year but warned of cost headwinds following the UK budget, which it plans to mitigate through price increases and efficiencies.
The Faversham, Kent-based company, which runs 290 pubs primarily in the South East, is Britain’s oldest brewer.
Pretax profit for the 26 weeks ended December 28 rose to £4.3 million from £1.1 million a year prior, despite a 4.5% decline in revenue to £85.0 million from £89.0 million.
The board raised the interim dividend by 3.6% to 4.35 pence per share from 4.20p.
Shepherd Neame cautioned that the budget measures, including increases in the national living wage and national insurance, will result in an annualised cost impact of £2.6 million.
The company said it will counter these pressures over the next 18 months through price hikes and cost efficiencies.
Chief Executive Officer Jonathan Neame said: ‘The additional costs imposed on our sector are most unwelcome, but the business model is flexible, and we can adapt to the new circumstances.’
Like-for-like retail sales rose 4.4%, with a particularly strong performance inside the M25, where sales increased 9.0%. However, beer volumes continued to decline, falling 13% as the company said it is shifting its focus away from low-margin off-trade sales.
Looking ahead, Neame said the company remains confident in its long-term strategy and will continue investing in its pub estate while adapting to market challenges.
Shares in Shepherd Neame were unchanged at 495.00 pence in the Aquis Stock Exchange on Wednesday afternoon.
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