Kent-based brewer and pubs operator Shepherd Neame (LON: SHEP) like-for-like revenues from pubs and brewing volumes continue to recover, but trading remains tough for the Aquis-quoted company because of rising costs.
Last year’s overall trading was in line with expectations. Like-for-like sales of managed pubs were 11% higher in the year just ended. In the most recent six-week trading period sales were still down 4.1% when compared with pre-pandemic levels. That reflects an improving trend. Coastal pubs are trading strongly but London pubs are taking longer to rebuild sales.
Tenanted pubs income is improving but volumes are still below pre-pandemic levels. Brewing volumes have held up well.
Net debt was reduced from £93.2m to £75.3m by the end of June 2022. Disposals have helped with the reduction. They have been achieved at prices above book value, which means that NAV could be higher than the last reported figure of 1419p a share. That is well above the share price of 812.5p.
Expectations
Peel Hunt expects a return to profit in 2021-22. The estimated 2021-22 pre-tax profit of £7.2m is expected to improve to £9.6m this year, which is a £900,000 reduction on the previous forecast.
The shares are trading on 16 times prospective 2022-23 earnings. The dividend is being rebuilt and the forecast yield is 3%.
