Brain's profits fall 11.5%
Wales's biggest brewer and retailer, SA Brain, has reported a slowdown in growth after a very challenging year.
The company has reported a drop in pre-tax profit to £10m from £11.3m the year before on turnover up £300,000 to £123.644m for the year to 30 September 2006 - equating to a 2% rise.
The company said that it had performed "better than the market" in a year when it had taken steps to put the business in the best possible position for the coming years.
These included a new computer system and £700,000 of costs involved in restructuring and added pension costs.
However, Brain's saw a £3.5m profit on the sale of unlicensed premises - an increase of £1.8m on the year before.
Its managed division achieved sales growth of 1.7% and a 2.7% rise in trading profit. Food sales grew by 7% and now account for 26% of managed house turnover. Energy costs increased by 22% on the previous year and the licensing bill shot up by 28%.
Chief executive Scott Waddington said: "These costs, combined with minimum wage increases ahead of inflation, made it difficult to maintain profit conversion which dropped 1% year-on-year. Further development of our food offers has been accelerated, particularly in the value, and community end of the market where we have not been as aggressive as the competition to date."
The 150-strong tenanted division of Brain's has been boosted by the transfer of 22 smaller managed pubs in the past 18 months. Income growth was up by 26% with 19 pubs on a new leasehold agreement.
Waddington added: "The smoking ban will be even more challenging for our tenants as these sites have made less progress in developing food offers and still rely on good levels of beer volumes that are likely to decline after the ban."
Brain's beer volume declined 1.6% compared to a national decline of 4.1%.
Waddington stated: "Ale volumes declined in the year by 8.8% although we believe that the decline in the ale category in Wales is higher than these numbers suggest.
"The company's ambition of maintaining its market position in Wales remains totally realistic; following several year's vigorous business growth, SA Brain has put in a robust performance when others in the industry have had to consolidate or combine to achieve the economies of scale needed to survive in difficult trading conditions."
