Marston’s warns of weak demand but is cheered by resilience

PUBCO Marston’s has warned of weak consumer demand during 2012 and is pinning its hopes of a trading boost on events such as the Euro 2012 football tournament and the Queen’s Diamond Jubilee celebrations.

In a trading update for the 23 weeks to March 10, 2012, the Wolverhampton-based business said its performance had remained resilient despite the post-festive lull.

“After a good Christmas and New Year, market conditions have, as anticipated, been somewhat more subdued against stronger prior year comparatives which benefited in part from milder weather. Profitability continues to be in line with our expectations and we continue to make good progress in each of our trading divisions,” it said.

In its managed pubs division, like-for-like sales during the 23-week period were 3.5% ahead of last year, including like-for-like food sales growth of 3.9% and like-for-like wet sales (drinks) growth of 3.4%.  

Operating margin was in line with last year and the firm said its plan to build around 25 pub-restaurants in the current financial year remained on track.

In tenanted and franchised pubs, underlying profits continued to increase with profits estimated to be 3% ahead of last year.  The firm said the performance reflected the successful rollout of Retail Agreements in 400 of its pubs, and robust trading in the traditional tenanted estate.

Beer volumes are up 2% on last year and it said its focus on localness and premium ales continued to drive growth, with premium cask ale up 2% and bottled ale up 10% in the period. The firm’s beer portfolio includes brands such as Pedigree, Hobgoblin, Banks’s, Jennings, Wychwood, Ringwood, Brakspear and Mansfield.

Net debt and cash flow are in line with expectations, it added.

Ralph Findlay, Marston’s chief executive, said: “We expect the consumer backdrop to remain weak in 2012, but with potential for better trading periods around Euro 2012 and the Queen’s Diamond Jubilee.  

“Our clearly defined strategy, underpinned by our continued focus on value, service and quality has ensured a resilient performance.  We remain well positioned to make progress towards our key objectives of sustainable growth, improved return on capital and reduced leverage.”

The firm’s interim results will be announced on May 17, 2012.