Marston's swings to profit in first half

FTSE 250 pub group Marston’s swung to a profit in the first half on surging revenue, as the company opened new pubs.

For the 26 weeks ended 2 April, statutory pre-tax profit came in at £22.8m compared to a loss of £27.5m in the same period the year before, as underlying group revenue jumped 11.5% to £444.3m.

Marston’s attributed the revenue increase to the positive impact of new openings, growth in its beer brands, and the acquisition of Thwaites' beer business.

The pub group, which has opened seven new-build pub-restaurants in the first half and is targeting at least 20 for the full year and each year thereafter, lifted its interim dividend by 4% to 2.6p per share.

Chief executive officer Ralph Findlay said: “We are encouraged by our first half performance and are on track to meet our expectations for the year. In pubs, we have driven our growth by the organic development of pub-restaurants and franchise-style pubs, and more recently through investment in lodges and premium bars, widening our appeal.

“In Brewing, we had an excellent first half year and achieved good growth through our industry-leading brands and service."

Marston’s noted two pieces of government legislation coming into effect in the second half of the year. It said the planned introduction of the Pubs Code will impact the tenanted and leased pub sector.

However, the company said its leased pubs generate around 15% of its total pub profits so it is not materially exposed to potential adverse consequences of the legislation.

The second is the Living Wage, which was introduced on 1 April and will increase staff costs in pubs.

“We had anticipated that staff costs would increase over time, and that the Minimum Wage and Living Wage would converge, so the impact over and above our existing forecasts was relatively modest. We have no plans to review other staff benefits as a consequence of the introduction of the Living Wage.”

At 0917 BST, Marston’s shares were up 3.3% to 155.09p.