Shepherd Neame reports strong recovery as pandemic restrictions end

Shepherd Neame is brewing a comeback as demand recovers following the end of pandemic restrictions.

Its full-year results reveal consumer appetite has been robust in a recovering market, with retail pubs achieving 62 per cent of 2019 sales between 12 April and 16 May when pubs re-opened outside, and 97 per cent of previous sales from May 17 when indoor trading returned.

The start of the new financial year has also been encouraging for the company, with demand for food and accommodation rebounding since July.

Drink demand has also improved in London since the return of workers to offices. 

For the 18 weeks from 27 June to 30 October, like-for-like sales in the group’s retail pubs reached 91 per cent of 2019’s levels and were up 37 per cent versus 2020.

Room sales were also 29 per cent higher 2019 and up 44.0 per cent compared to 2020.

During the same period, like-for-like drinks sales in its retail pubs reached 76 per cent of 2019 totals, and were up 49.1 per cent compared to 2020.

Nevertheless, Shepherd Neame’s revenues are down, and the company has reported a loss due to challenging market conditions.

The UK’s oldest brewer and the owner of 310 pubs in south east England has been unable to trade for 296 of the previous 421 previous days.

Total revenue for the year was £86.9m, down from £118.2m, while underlying operating loss before tax3 was £4.2m, compared to a profit of £1.5m in 2020 restated figures.

Despite making a loss, the company has managed its net debt and cash flow tightly.

Net debt increased minimally to £149.1m from £140.3m, while lease liabilities rose to £58.3m from £55.9m.

The company’s net asset value per share fell to £11.40, down from £12.47, as a result of the IFRS transition and accumulated Covid-19 losses. 

It is also selling sell two hotels for £5.75m to RedCat Pub Company, in a deal that will be completed in mid-November.

Jonathan Neame, CEO of Shepherd Neame said: “We face challenges ahead, particularly with supply chain and inflationary pressures. That said, we are confident that the long term fundamental drivers for the business remain strong, including the ongoing infrastructure investment in our heartland, anticipated local population growth, changes in consumer and workplace trends, and our position at the centre of the community.”