Shepherd Neame reports steady first-half earnings growth

(Sharecast News) - Shepherd Neame reported steady first-half earnings growth on Wednesday as strong pub trading, particularly in London, offset weaker beer volumes and higher logistics costs. The AQSE-traded Kent-based brewer and pub operator said revenue for the 26 weeks ended 27 December was broadly flat at £84.7m, compared with £85.0m a year earlier, as growth in its pub estate was offset by a decline in its brewing and brands division.

Statutory profit before tax rose 2.7% to £4.4m, while underlying profit before tax was unchanged at £4.2m.

Underlying EBITDA increased 0.8% to £13.1m, and basic earnings per share rose to 21.0p from 20.3p, with underlying EPS edging up to 20.3p from 20.1p.

Net assets per share improved to £12.34 from £12.21.

The company declared an interim dividend of 4.50p, up 3.4% on the prior year.

Operationally, the group delivered total retail like-for-like sales growth of 4.5%, driven by particularly strong performance in London, where like-for-like sales inside the M25 rose 11.2%, compared with a 1.4% increase outside the capital.

Like-for-like tenanted pub income increased 3.1%.

Retail like-for-like drink sales rose 5.6% and food sales increased 4.3%, while Christmas trading was robust, with like-for-like retail sales up 8.1% over the five weeks to early January.

Divisional revenue in the retail business was flat at £42.3m, but underlying operating profit rose 5.8% to £5.8m.

The tenanted division reported revenue growth of 4.8% to £19.0m, although underlying operating profit edged lower to £6.4m from £6.6m.

In contrast, brewing and brands continued to face pressure, with revenue down 4.7% to £22.7m and underlying operating profit halving to £0.3m.

Total beer volumes fell 6.6%, with own beer volumes down 11.6%.

The company said it continued to invest in its estate, with capital expenditure of £6.2m, including two major London projects, while also refinancing its bank facilities on improved terms.

A new £15m term loan and £30m revolving credit facility, alongside existing private placement funding, bring total available facilities to £100m.

Current trading remained broadly in line with first-half trends, with retail like-for-like sales up 4.4% over the 37 weeks to mid-March and tenanted pub income up 3.0%, while beer volumes remained under pressure.

"Demand has remained resilient, with a further exceptional performance from our London pubs, and a good trading performance in our tenanted estate," said chief executive Jonathan Neame.

"Our strong pub trading and some easing of cost pressures gives us cause for optimism going forward, but some caution is naturally warranted given the situation in the Middle East."

At 0828 GMT, shares in Shepherd Neame were up 3.19% at 448p.

Reporting by Josh White for Sharecast.com.

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