Marston’s revenue rallies but annual profits fall

Pub group Marston’s has reported a fall in full-year underlying pre-tax profit which it attributed to lower food sales and more cautious consumer spending.

For the 52 weeks to the end of September, the Wolverhampton-based company reported underlying profit before tax of £101m, down from £104m the year before.

Revenue rose to £1.17bn, up 3%, which it said reflected the positive impact of new openings and pub acquisitions and like-for-like sales growth in pubs, and growth in brewing helped by new distribution contracts with New River, Trust Inns, Charles Wells and Young’s.

The group said its trading performance in 2019 was strong in wet-led pubs and brewing, despite challenging comparatives which included the benefits of the 2018 World Cup and a hot summer, but with more subdued sales in food-led pubs.

Pub like-for-like sales increased by 0.8%, and brewing volumes were 1% ahead of the previous year.

Marston’s said it is making good progress with its debt reduction plans as it seeks to meet is debt reduction target of £200m by 2023.

The group said it is targeting at least £70m in disposals of non-core pubs and assets in 2020, £50m of which have already been exchanged or completed.

Earlier this month, Marston’s announced the sale of 137 of its pubs to Admiral Taverns in a £44.9m deal in in line with its plans to reduce its debt in part through the disposal of certain non-core assets. The pubs being sold are smaller wet-led leased, tenanted and franchised pubs.

Ralph Findlay, CEO said: “We are making good progress with our debt reduction plans and are ahead of schedule in meeting the accelerated £70 million of disposal proceeds which we are targeting in the current year.

“We continue to benefit from Marston’s balanced business model and our Taverns wet-led community pubs and brewing businesses have both once again outperformed the market, building on an outstanding year last year. We are employing a renewed focus on the proposition in our food-led pubs and remain well placed to benefit from reduced supply in this market segment, of which there is beginning to be some evidence.

“Our principal focus remains to reduce our net debt by £200m by 2023 – or earlier – and the measures we are taking now will result in a high quality business which is cash generative after dividends and capital expenditure. Trading is on track for the initial weeks of the current year and we are well prepared for the all-important Christmas and New Year period.”