Brewery sees profits fall by more than half

Lancashire brewery Thwaites saw revenues grow by five per cent to just under £100m last year.

Despite the increase in revenues the brewery saw its profit before tax more than halve to £4.5m from £9.8m.

The firm said the drop was a result an adverse mark on market valuation on a swap contracts of £2.5m and one-off pension costs of £1.2m.

Thwaites said it has had a good year and sales have increased in all areas.

The results have come to the end of several long-term projects and completed a three-year period of investment.

The pubs and inns both posted strong performance and growth in the year, partly as a result of a long period of hot summer weather and the Football World Cup.

However, the hotels and spas faced more of a challenge, experiencing significant cost headwinds, as well as disruption from Brexit, a weakening in corporate demand and room rate pressure in an increasingly competitive hotel market.

A spokesman for Thwaites said: “The challenges we face from increasing costs, particularly the national living wage, auto enrolment and fixed charge levies on green energy have led us to look at ways to increase productivity.

“We have taken various steps to deal with these including restructuring the teams in our hotels in the first half of the year.

“Our objective is to improve performance by focusing on increasing sales and the quality of service delivery in our front of house teams. Whilst there was inevitably some disruption as a result of this, we are pleased with the new structure which is now bedded in and starting to deliver the benefits that we were looking for.

“Our strategy of investing in our core pub estate, inns and hotels, whilst continuing to sell poorer quality properties to recycle capital into higher returning and more sustainable assets is a successful one, which has significantly improved the quality of our asset base over the past few years, and allowed the business to grow.”

Turnover for the year to 31 March 2019 grew by 5% to £96.9m.

The primary driver of growth was in inns, which are experiencing strong like for like growth as well as the benefit of investment.

Underlying operating profit is level with last year at £12.9m.

The performance of the hotels has suffered year on year, offsetting gains elsewhere.

Thwaites continued to invest in developing properties and have completed several large projects, including the £6.5m refurbishment of the Beverley Arms and the completion of our new brewery and offices.

The brewery acquired the Funny Girls business from the administrators but did not acquire any new properties in the year and will only do so where outstanding opportunities present themselves.

At the end of the financial year, Ann Yerburgh stepped down as chairman.

During her 19 years in this role she has overseen many changes and helped to steer the company through some very challenging times, including the smoking ban and the 2009 financial crisis.

John Barnes retired as a non-executive at the end of December.

Andrew Stothert joined the board as a non-executive director in January.

Andrew is the founder of Brand Vista, an international brand consultancy based in Manchester.

Mark Fisher agreed to join as a non-executive director from June.

Mark is currently chief development officer of Merlin Entertainments, where he has been a senior member of the management team for over 18 years.