London pubs give Shepherd Neame a boost

Kent brewer Shepherd Neame said its London pubs continued to drive growth across its pub estate, despite the current recessionary environment.

The brewer said like-for-like sales across its pubs in the capital had risen 2.9 per cent in the 13 weeks to February 28, 2009.

Its 47 managed pubs had seen like-for-like sales up 1.8 per cent in the same period.

Shepherd Neame said like-for-like turnover across its overall pub portfolio had dipped 0.2 per cent in the six months to December 27, 2008, with the contribution from its 320 tenanted pubs down 4.1 per cent.

Pre-tax profits slumped 28 per cent to £3.6m.

"We have increased our investment in promotional activity and have supported our tenants with a number of small capital projects," the group said, adding that it had grown investment in repairs and decorations by £160,000 compared with last year.

Sheps said total beer growth for the first six months was 6.7 per cent and the group had responded to the growing trend for take-home sales.

"The market has seen an accelerated shift from on to off trade beer consumption and our business has responded in line with this trend," it said.

Sheps said its margins had been squeezed by this change in sales mix, although it expected the higher cost of raw material to "abate" in the middle of this year.

An exceptional charge of £308,000 was taken against consulting and other costs in respect of the brewer's new computer system.

Chief executive Jonathan Neame said he anticipated the second half of the current financial year to "follow the pattern of the first half".

The business could withstand the pressures of the current economic environment, he added.

Shepherd Neame's first half numbers:

Turnover: £56.2m (up 7.3%)

Operating profit*: £5.5m (down 16.7%)

Pre-tax profit*: £3.6m (down 28%)

Earnings per share*: 20.7p (down 25%)

Interim dividend: 4.55p (no change)

*pre-exceptional items