Cost cuts help Black Sheep to better profits

BLACK Sheep Brewery has seen turnover increase by almost £1m as the company recorded pre-tax profits of more than £600,000.

The increase in profits, up from £84,889 the previous year, followed a 6% cut in running costs which included cutting staff and a company-wide pay freeze.

Paul Theakston will step down from his post as joint managing director in 2011 and become part-time chairman after a near half century in the brewing industry.

In the year to the end of March, Black Sheep increased its sales volume by 2.4%.

Writing in the company’s annual directors’ report, Paul Theakston says: “This seemingly small increase, coupled with sustaining margins and continuing close control of overheads was enough to make a significant difference to our profitability.

“This graphically illustrates the profit and loss sensitivity of a business like ours, where a high level of fixed costs leaves the business very sensitive to volume to achieve a solid bottom line profit.

“From a strategic point of view, the management team is working hard to plan the future development of the business to reduce that volume sensitivity.”

Pointing to the rise in beer duty for a 0.6% fall in gross profit margin, Mr Theakston welcomed the decision not to raise duty further in the emergency Budget.

“Perhaps the message of not killing the goose that laid the golden eggs is getting through at last,” he says.

Nobody was available from Black Sheep Brewery was available to comment.