UK: Cains Beer Company makes loss of Ј2.8 million over 14 months, still optimistic about its prospects
Cains Beer Company has reported a 14-month loss of Ј2.8m and warned of a difficult time ahead as the smoking ban and consumer downturn continue to bite, Liverpool Daily Post published April 11.
But the company, which reported its first results since its reverse takeover of pubs group Honeycombe Leisure, said results were in line with expectations and said it was optimistic about its prospects.
Turnover in the 14 months to October, 2007, stood at Ј43.2m, up from Ј24m in the year to August 2006, thanks to the extra 92 pubs it acquired from Honeycombe.
But the company went into the red thanks to administrative costs associated with its Ј37m deal for loss-making Honeycombe in 2007, as well as the impact of the smoking ban, the miserable summer weather and the decline in consumer confidence on its trading.
Chief executive Sudarghara Dusanj said: “We remain cautious about the outlook for 2008 and are aware that the smoking ban is going to have a significant impact in the short term on the business.
“However, we are confident that a non-smoking environment will, in the medium and long term, result in growth in both bar and food sales.”
Cains’ enlarged pub estate saw like-for-like sales fall 11%, with alcohol sales down 11.5% and food down 7.6%.
Cains’ contracts division, which brews and packages beers for third parties, saw sales rise 7.4%. Its brands division, which brews, sells and markets Cains-branded products, saw sales rise 1%.
The company says the gross margin across both divisions rose by 1% despite a “significant increase” in the price of malt, hops and barley.
Selling and distribution costs have risen 23.7% on a like-for-like basis, largely thanks to higher fuel prices.
Cains has embarked on a refurbishment of its pub estate and has also made efficiency savings with the closure of Honeycombe’s old head office in Preston and the creation of a new central distribution service for its beers.
Mr Dusanj said returning the former Honeycombe business to profitability would take time.
“The turnaround will take a couple of years,” he said. “We have also gone into uncertain times.”
11 April, 2008
