Brewer feels the pinch as consumers tighten their belts
Financial pressures affecting consumers have been reflected in the latest figures for Salford brewer Hydes.
Accounts filed at Companies House show that the family-run brewery suffered stagnant revenues and a fall in pre-tax profits for the year to April 1.
Turnover of £31.045m was slightly down on last year’s figure of £31.1m. Pre-tax profits fell from £3.4m in 2017 to £2.44m this year.
The company said the flat turnover was largely due to the disposal of one pub, the 256 in Fallowfield, in the current financial year, and the Highgrove in Heald Green and the Ryecroft, Cheadle Hulme, in the prior financial year.
This accounted for £600,000 of sales decline.
However, chairman Peter Johnson said the company is well placed for future trading, and announced an increase in the final dividend from £1.43p per share last year, to £1.58p this time.
In his report, he said: “In the outlook section of my statement last year I indicated that in view of the political and economic uncertainty the company would find turnover growth very challenging in the financial year to 1 April, 2018.
“Our business is highly dependent on consumer confidence and spending and in common with the wider pub and casual dining industry it became clear in the Winter months that customers were beginning to feel the pinch from higher inflation.
“The constraint on customer spending was exacerbated by the so-called ‘Beast from the East’ which brought icy winds and heavy snow in March which particularly hit our food-led destination sites.
“Like-for-like turnover in our managed houses was 5.2% lower in that month compared to March 2017 and that decline had the impact of leaving sales for the financial year broadly flat.
“The growing cost pressures put on our industry through the revaluations of business rates, national living and minimum wage increases and additional supplier costs brought about by the weakness of sterling have also made business tougher, but have been mitigated, in part, by modest price increases and savings in other overheads.”
He added: “Against that backdrop, we consider that our operating profit, before exceptional items, at £2.674m (2017 £2.836m) reflects a creditable result.”
Looking ahead, he said: “While financial year 2019 looks to be another challenging year, the company, with its strong balance sheet, sustainable dividend and high quality estate, is well placed to capitalise on the opportunities, as well as manage any risks that may arise and deliver value to our shareholders.”
The company, which dates back to 1863, owns 36 managed, and 17 tenanted pubs in the North West of England and North Wales.
Hydes’ defined benefit pension scheme liability decreased from £4.6m to £4.2m. The company plans to make annual contributions of £500,000, plus any payments relating to scheme expenses, for the next 10 years.
The report said, in September 2015, the company’s bank facilities were renegotiated and increased with the Royal Bank of Scotland.
These comprise a bank overdraft of £1m, a five-year amortising loan of £5m, and a revolving credit facility of £13.25m due for repayment by September 22, 2020.
