Profits get lift at Midlands brewer

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WOLVERHAMPTON & Dudley Breweries yesterday brushed aside two successive sets of disappointing results. Better-than-expected annual profits of pounds 35.2m and a big dividend increase helped to revitalise the brewing and pub company's flagging share price.

The favourable City reaction was despite the fact that a large part of the 6.6 per cent profits rise stemmed from a cut in staff bonuses from pounds 702,000 to pounds 109,000. Bonuses are calculated on profit increases struck after interest, and before property disposals.

Wolves has capped the active year to 27 September with a 10.7 per cent dividend increase to 11.4p. That helped to lift the shares, which have underperformed the market by nearly 15 per cent over the past three months, by 10p to 536p.

The results were aided by an eight-month, pounds 324,000 trading profit from the purchase of the Hartlepool-based Camerons Brewery and 51 pubs from Brent Walker. Camerons' own-label beers were repackaged and relaunched last month under the names of Camerons Strongarm and Camerons Bitter.

Costs have also been slashed at Camerons. Staff numbers have been cut from 360 to 120 and some of the plant has been mothballed.

The company has also closed the brewery at Dudley, built 13 pubs and bought a further 13.

Wolves admitted miscalculating its pricing policy last Christmas, when it was outmanoeuvred by a brewer, believed to be Bass.

It said the outlook for 1993 was still bleak, with reduced opportunities to raise profit margins through cost-cutting and higher prices. It predicts a 3 per cent fall in national beer output.

Unemployment has also become an issue in the company's main trading area in the West Midlands. It has 60 pubs on housing estates, and a couple of outlets in the North-east that could be affected by pit closures.

The book value of the company's 953 pubs, restaurants and hotels has been cut by 3.7 per cent to pounds 356m. Bad debts rose.