Southwold-based Adnams reports 7% increase in first half revenues
- Credit: Nick Butcher
Southwold brewer, distiller and leisure retailer Adnams has reported an increase in sales but a dip in operating profit for the first half of the year.
Turnover across the company's businesses for the six months to June 30 grew by 7% compared with last year's first half, from £29.139m to £31.219m.
But operating profit fell from £962,000 to £624,000, in line with a trading update issued at the time of Adnams' annual general meeting in April and reflecting the cost of investment in its shop and managed house retail operations.
Bottom-line pre-tax profit, however, increased from £1,369m at last year's half-way stage to £2.043m as a result of a profit of £1.419m from the sale of assets, well ahead of gains on disposals during the same period a year earlier.
Adnams' own beer volumes increased by 7% in the first half, with growth led by the continuing success of Ghost Ship, although a number of smaller produces also proved successful.
Company chairman Jonathan Adnams said: 'The fact that we have been able to push our own beer volumes ahead in the last few years in the face of a fiercely competitive market is a great credit to our sales and marketing work and in particular to our success in reading market trends and producing beers thatn appeal to consumer tastes.'
He added: 'This trend supports the major £7m investment that we are making in our brewery, which should be complete a year from now. this will give us additional capacity together with the flexibility to make the wider range of beer styles that are now being demanded.'
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Spirit volumes during the first half were 60% up on a year earlier, led by the popularity of Copper House Gin, with a major extension to the distillery which opened early in the year having tripled capacity.
'The additional capacity is allowing us to lay down more whisky, a process that slackened in the second half of last year as we had to devoted capacity to the immediate demand for gin,' said Mr Adnams.
Adnams managed house business, including the Swan and the Crown in Southwold, the White Horse at Blakeney, the Ship at Levington and, a recent addition, the Plough at Wangford, produced results ahead of 2015 but 'slightly behind' expectations, with last year's trading having been affected by refurbishment work.
'Relatively poor weather conditions during key trading periods did not help and some extra costs were incurred as we have sought to put the right teams in place at each property,' said Mr Adnams.
Results from the company's leased and tenanted pub estate were ahead of last year on a like-for-like basis and only slightly down in total despite the sale of a number of properties, cluding the Cherry Tree at Harleston during the first half of this year. Two other pubs are currently only the market, the Lord Nelson in Ipswich and the King's Head in Southwold.
Adnams shops continued to trade well during the first half, although results were affected by the weakness in the value of pound which has the effect of driving up the price of imported wine.
'Our shops have been a great success in helping to display our brand to a wider audience and in boosting the growth in our beers and spirits, and we plan to gradually extend our presence over the next few years,' said Mr Adnams.
He added that, in addition to the immediate impact of the UK's vote to leave the European Union on the value of sterling, the recent fall interest rates would help Adnams as a borrower although it was also increase the value of the company's pension liabilities.
'More important will be the overall impact on the economy,' he added. 'Despite this turbulance we will maintain our eye on the longer term; we need to invest to maintain and grow the company and our plans to do this remain unchanged.'