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In the face of rapidly rising costs (notably malting barley), the smoking ban, stiff price competition from the supermarkets and a possible recession, Adnams has announced an ambitious expansion plan. Over the next five years it aims to more than double operating profits.
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Unfortunately, there don't appear to be any concrete details as to how this will be achieved. Adnams believes that it can revive demand for cask beer, which now only accounts for around one pint out of every 11 sold in the UK. That would be a major achievement in itself. To this end, the brewery is developing new beers for specific customers. The first one is a chilled and filtered beer called Spin,drift, which is being test-marketed in 200 Punch Tavern outlets. Adnams also plans to expand its Cellar and Kitchen chain of shops.
The problem with five-year plans is that they sometimes struggle to achieve their targets and middle management can quickly become disillusioned if early targets are not met. However, the forward plans should not distract attention from Adnams' solid achievements in 2007, including maintaining volume sales and cutting brewing costs.
ADNAMS |
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|---|---|---|---|---|
| ORD PRICE: | 13,800p | MARKET VALUE: | £38.6m | |
| TOUCH: | 13,700p-14,500p | 12-MONTH HIGH: | 13,800p | LOW: 13,000p |
| DIVIDEND YIELD: | 1% | PE RATIO: | 37 | |
| NET ASSET VALUE: | 8,657p | Cash: | £9.7m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p)* | Dividend per share (p)* |
|---|---|---|---|---|
| 2006 | 46.1 | 3.80 | 140.0 | 175 |
| 2007 | 47.4 | 7.46 | 360.8 | 183 |
| % change | +3 | +96 | +158 | +5 |
Ex-div:09 Apr Payment:28 Apr *Per 100p "B" Ordinary shares. |
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A property gain boosted 2007 profits by over £3m and the unquoted 'A' shares have 72 per cent of the votes. The shares are high enough.
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-IC-2.1.3g-prod - 17/03/2010 18:13:09 - ben.wheeler
