Lockdown dents final profits at Young & Co as it predicts flat sales ahead
By Abigail Townsend
Date: Thursday 04 Jun 2020
(Sharecast News) - Young & Co's Brewery has announced plans to reopen all its pubs by 3 August, but warned sales are unlikely to normalise until 2022.
The Covid-19 pandemic has hit the leisure sector particularly hard, as pubs, restaurants and other venues were forced to shut their doors.
Lockdown measures saw all of Young & Co's pubs close for the last ten days of the year to 30 March, and that - coupled with a "gradual decline" in trade leading up to the lockdown - caused an £13m revenue shortfall and a £7.7m hit to final profits.
Full-year revenue came in at £311.6m, a 2.6% improvement on 2019, while operating profits fell 18.8% to £36.2m. Pre-tax profits tumbled 24.3% at £29.9m.
Managed house revenue rose 3% to £299.1m, boosted by acquisitions. Underlying sales were down 2.4%.
Young's noted: "In recent years we have faced and overcome numerous challenges, but none more threatening that the coronavirus pandemic."
With lockdown measures now starting to ease, the London-based firm said it planned to re-open all its pubs by 3 August. But it warned that trading in the 2021 full-year would be "materially below average".
It added: "We expect sales to return to more normalised levels in 2022, when this unprecedented period is at an end, and we remain confident in our proven strategy."
Chief executive Patrick Dardis said: "We are confident with the steps we have taken to safeguard our business from the immediate threat of coronavirus. The board expects the business to be in a position to return to profitable growth when this unprecedented period is at an end and conditions allow."
The company, which has pulled its final dividend, said it had taken advantage of government support, including business rates holidays and furloughing staff. It has also arranged £50.0m additional funds and committed facilities, and issued £30m in commercial paper under the Bank of England's Covid Corporate Financing Facility.
Russ Mould, investment director at AJ Bell, said: "The pub is supposed to be a warm, convivial environment. Will a more sterile setting with staff in masks and gloves, ordering drinks purely through an app and tables set two metres apart really appeal?
"Beer gardens might be one answer to the challenges of operating amid the pandemic, and sites with lots of outdoor space will clearly be best placed - hence Young's saying it may reopen some of these in mid-July. The company and its peers will be praying the exceptionally sunny weather the country enjoyed in May returns in time for their reopening."
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10 Lower Thames St,
London EC3R 6EN