Marston’s toasts return to profit as sunny weather lifts orders

Marston’s has rebounded to a half-year profit, thanks to cost saving efforts and a good weather boost to food and drink sales.

The Wolverhampton-based pub operator, which merged its brewery business with industry giant Carlsberg last year, reported a £19.5million pre-tax profit for the six months ending 29 March, compared to a £26.9million loss a year earlier.

It said underlying earnings benefited from ‘strong operational delivery’ and cost efficiencies, such as the roll-out of labour-planning dashboards and targeted product placement.

Total turnover dipped marginally to £427.4million after the firm conducted around £50million of strategic disposals in the prior year, including the sale of multiple pubs to Red Oak Taverns and Admiral Taverns.

Like-for-like revenues also grew by 1.3 per cent thanks to higher food and beverage orders, a record trading performance over Christmas Day, and events like the Luke Humphries Cool Hand Cup darts competition.

In the first five weeks since then, comparable sales soared by 10.5 per cent on the back of solid trading on Mother’s Day and over the Easter weekend.

Consequently, Marston’s expects its annual result to align with market forecasts, with underlying pre-tax profits set to be £66.8million.

Justin Platt, chief executive of Marston’s, said: ‘With strong recent trading across our nationwide estate of great local pubs, we are excited for the summer months ahead.

‘We remain confident in achieving our financial goals for the full year and focused on executing our strategy as a pure-play hospitality company to deliver sustainable growth and increasing returns for our shareholders.’

Nonetheless, the pub sector faces challenging conditions due to cost-of-living pressures and recent tax and wage hikes in Chancellor Rachel Reeves’ first Budget.

Since last month, employers’ National Insurance contributions stand at 15 per cent on annual salaries above £5,000, up from 13.8 per cent on wages exceeding £9,100.

The National Living Wage also went up by 6.7 per cent to £12.21 per hour, while business rates relief for hospitality venues was reduced from 75 per cent to 40 per cent, up to a cash cap of £110,000 per firm.

Many pub trade bodies have warned that the measures will lead to price increases and more pubs shutting their doors for good.

The number of pubs across England and Wales fell below 39,000 for the first time last year after over 400 were demolished or converted to a separate use, according to real estate business Altus Group.

Marston’s shares were 7.15 per cent higher at 44.2p on Tuesday morning, making them the highest riser on the FTSE All-Share Index.

Analysts at Peel Hunt said: ‘Outperformance was primarily driven by operational efficiencies. 

‘These gains have fully offset higher labour costs in 2H, and with further profit initiatives underway, the recent acceleration in LFL sales points to EBITDA growth in 2H. 

‘We believe further forecast upgrades are likely.’