The group said it had also increased underlying profits despite “continued inflationary pressures across the business” in its results for the 23 weeks ended 23 December 2023.
Company revenue for H1 was a record high of £89.0m (H1 2023: £85.3m), which represented an increase of 4.3% on the prior year.
Company EBITDA (earnings before interest, taxation, depreciation and amortisation) grew by 5.2% to £12m from £11.4m in last year’s equivalent period.
Shepherd Neame chief executive Jonathan Neame labelled the results as a “strong trading period” combined with the easing of some of the inflationary pressures the company has faced in recent years.
“Consumer demand has remained robust throughout the period,” Neame said. “Our pubs, in particular, have performed well, with strong like-for-like sales growth in both tenanted and retail pubs."
Record levels
Neame continued: “Revenue has risen to record levels for the first half of the year. Net debt, excluding lease liabilities, is broadly level even after a period of significant investment, and the interim dividend has again been increased.”
He added an “unseasonably damp” summer in July and August temporarily hampered demand in its coastal sites before a late burst of sunshine in September and early October.
Meanwhile, the company only experienced six days of rail strikes during the period compared to the severe disruption in the prior year.
Neame said: “Christmas trade was exceptional, as consumers celebrated their first uninterrupted Christmas since 2019, with many of our pubs achieving daily or weekly record sales.
“Throughout the period, we have enjoyed the continued return to offices by city centre workers and in-bound tourism nearing pre-pandemic levels. Consequently, this has been a particularly strong period for our London pubs.
“While the cost-of-living crisis is still squeezing consumer pockets, hospitality has fared better than high street retail. Within that context, pubs have generally been performing better than casual dining, once again proving the resilience of the great British pub.”
Higher disposable income
On the future, Neame said the impact of higher interest rates is still feeding through into mortgages as some homeowners come off low fixed-rate deals and the impact for many is yet to be felt.
However, real wages are starting to grow again and if this continues, and prices start to stabilise and interest rates fall, as many predict, these factors should result in higher net disposable income in due course.
Other headline figures included underlying operating profit was £6.8m (H1 2023: £6.3m), an 8.0% rise while underlying profit before tax was £3.8m (H1 2023: £3.5m), an increase of 9.9%. Meanwhile, statutory profit before tax fell to £1.1m (H1 2023: £5.5m).
In its pubs, tenanted trade was “resilient” with divisional revenue rising slightly to £17.7m (H1 2023: £17.4m) while operating profit fell marginally to £6.6m (H1 2023: £6.9m).
Beer volumes are down as trade for cask ale and bottled ales declined but there was a strong performance in independent on-trade. Divisional revenue was £29.2m (H1 2023: £30.3m) with an operating profit of £0.2m (H1 2023: loss of £0.4m).
Shepherd Neame operates 296 pubs, of which 219 are tenanted or leased, 71 managed and six were held as investment properties under commercial free-of-tie leases with 85% of the estate being freehold.
