UK brewer and hotelier Adnams PLC (AQSE:ADB) warned of ongoing headwinds in the battered hospitality sector in today’s interim earnings call, during which chairman Dr Jonathan Adnams OBE laid out the myriad of challenges impacting the sector.
Sales across all of hospitality remain 15% below pre-pandemic levels, with around 35% of people saying they were spending less on going out during the cost-of-living crisis (KPMG research conducted in April says this figure could be as high as 65%).
Worryingly for Aquis-listed Adnams, the cask beer market is around 25% smaller than it was just four years ago in 2019.
Adnams’ pubs and hotels benefitted greatly from the visitor economy when the nation was reticent to travel abroad, but with flights and overseas holidays back in full force, patronage has suffered.
“Pubs and hotels continue to be in the eye of the storm with food inflation, the return of foreign holidays and for Adnams, a dependence on good weather due to the coastal location of many of our properties,” said Adnams.
On the pricing front, Adnams stated: “Increased prices have had to balance increased costs of production for our own beers and spirits and increased supplier costs for our wines. We remain highly conscious as to how much can be passed through to the end customer before demand is significantly impacted therefore, we keep competitor pricing under regular review.”
Against this backdrop, annual turnover flatlined at £30 million, with losses before tax surging from £1 million in the first half of 2022 to over £3.1 million in these interims.
Striking a positive tone, Admans told shareholders: “Although trading conditions continue to be uncertain, we are encouraged by the growth in new on-trade customer numbers, new listings in the off-trade and the performance of Ghost Ship 0.5%.”