Pub giant Marston’s hikes profits as summer boom adds to sizzling sales
Pub operator Marston's today said it expects to see higher growth in annual profit, after boosted sales in the summer led the turnaround from a disappointing first half of the year.
The figures
In a trading update before its preliminary annual results, Marston's said group turnover grew 15 per cent to more than £1.1bn. As such, anticipated profit before tax will be around £104m, up from £100.1m in 2017.
Total pub sales increased 3.2 per cent in 2018, including a like-for-like sales growth of 0.6 per cent. The latter was largely powered by a hotter-than-usual summer and England's performance in the World Cup, where like-for-like sales rose 1.6 per cent in the last 10 weeks alone.
Drinks-led taverns performed strongly in 2018, with managed and franchised like-for-like sales growth rising 3.8 per cent for the year, including 3.8 per cent growth in the last 10 weeks alone.
As expected, food-led destination pubs underperformed in 2018 due to poor weather conditions in the first six months and weakened trading during the World Cup. Premium bars, such as its Pitcher & Piano and Revere Country chains, performed well. In combined metrics, like-for-like sales for premium and destination venues came in 1.2 per cent behind last year, although momentum improved in the last ten weeks.
Marston's Beer Company, its brewery business, experienced strong growth as total volumes rose around 47 per cent in 2018, largely benefited by the acquisition of Charles Wells Brewing and Beer Business in 2017 which makes brands such as Bombardier, Young's and McGowan's.
Sales of its own and licensed brand beers exceeded 1m barrels in 2018 for the first time, with around 90 per cent of its own brand volume sold outside of Marston's own pubs.
In physical locations, 14 pub restaurants and bars and seven lodges were opened in 2018. Marston's plans to open a further 10 pub restaurants and bars and five lodges in 2019.
Additionally, the group has reached an agreement to acquire 15 former Mitchell's & Butlers' pubs from property investment firm Aprirose.
Why it's interesting
The trading update shows that while pubs struggled in the first half of 2018, Marston's is another to be buoyed by this year's unusually-long summer, coupled with a long run in the World Cup. Several pub operators were hit by heavy snow and rain, including JD Wetherspoon and Greene King, before making a turnaround.
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Marston's share price dipped on the news, falling 2.84 per cent.
What the company said
Marston's chief executive Ralph Findlay said:
"2018 was a strong year for our Taverns and Beer businesses. We have seen clear benefit from our balanced portfolio having achieved good growth in wet-led pubs and from brewing, maximising the trading opportunities provided by the good summer weather and World Cup.
"This year has been transformational for our market-leading beer business, with the benefits of the acquisition of CWBB and the new distribution contracts delivering strong profit growth. Although trading in Destination food-led pubs was weaker, this predominantly reflects issues beyond our control relating to unseasonal weather extremes and the World Cup.
"However we are encouraged that our dining pubs are now seeing improving momentum and we expect to make further progress in 2019. We are meeting the demands of our customers and continue to manage the inflationary cost environment well, which gives us confidence for the future.''