Marston's sees profits slide

03 December 2009
Marston's sees profits slide

Brewer and pub operator Marston's has seen its group revenue fall 3% to £645.1m, while profits slid 13.5% to £70.3m.

But despite a tougher year, the company said it had seen signs of improvement in the past few weeks, and described its start to the new financial year as "encouraging".

Chief executive Ralph Findlay said: "This was a creditable performance in a very challenging period. In addition, the improvement in trading we experienced over the second half-year has continued in recent weeks, and we have made an encouraging start to the new financial year. Although we are cautious about predicting recovery, we have good pubs and popular regional ales which are performing well. We have a strong platform to make further progress over the coming year."

The company's 496 managed pubs, part of the Inns and Taverns division, saw revenue decrease by 3.6% to £367.8m, which the firm said was principally as a result of 47 smaller pubs being transferred to Marston's Pub Company in 2008. The underlying operating profit of £60.3m was down 6.5% but the average profit per pub increased from £117,000 to £120,000. Total like-for-like sales were down 0.6%, with like-for-like food sales up 2.8% and like-for-like drinks sales down 2.4%. Food sales now make up 38% of the total retail sales in the division.

Marston's added that it was still on course to build 15 new managed pubs in 2010, with a further 45 pubs over the next two years, funded by a £165.6m rights issue in July this year.

Meanwhile its 1,688 tenanted pubs, within the Marston's Pub Company arm, saw total revenue fall 3.9% to £175.8m as a result of reduced volumes being sold to tenants and lessees. Underlying operating profit slid 7% to £81.8m, while the average profit per pub fell from £51,000 to £48,000.

Marston's said that it would invest an extra £5m in 2010 to make the weakest 20% of the pubs in its estate more attractive to customers.

It added that it expected to increase the number of pubs it runs under its Retail Agreement programme from 24 to 90 in 2010. The programme sees Marston's Pub Company take responsibility for the pub's retail offer, including drinks brands sold, food menus and pricing, while experienced licensees take charge of the staff and earn a percentage of revenue for a reduced cash requirement.

The group's brewing arm, Marston's Beer Company saw its revenue increase by 13.2% to £101.5m and a rise in underlying operating profit of 3.9% to £16m. Premium ale increased by 26% including 13% growth in the on-trade and 50% growth in the off-trade.

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By Neil Gerrard

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