Marston's sees lower full-year profits

Pub and brewery owner Marston's said it expected to report a fall in pre-tax profits due to lower earnings at its destination and premium businesses where higher wage costs hit margins.

The company forecast underlying full year pre-tax profits of £101m, with earnings before interest, tax, depreciation and amortisation expected to be flat. Group turnover was up 3% to £1.2bn, Marston's said in a trading update on Tuesday.

“In addition, we are seeking to accelerate our stated debt reduction target of £200m by 2023. To that end we are increasing our disposals guidance from £40m to £70m for the current financial year,” the company said.

“We therefore expect underlying profit before tax in 2020 to be at a similar level to 2019, reflecting growth in underlying operating profits offset by increased disposal activity, additional pub investment and higher interest charges.”

Total pub sales increased 3%, including like-for-like sales growth of 0.8% and the contribution from the company's pub expansion programme. In the most recent 10 weeks, like-for-like sales were up 1.9%.

Taverns pubs performed strongly with managed and franchised like-for-like sales growth of 1.9% including growth of 5.4% in the last 10 weeks, Marston's said.

Net debt was in line with expectations at £1.4bn. Marston's said it had increased stock levels to prepare for Brexit.

“We are confident that the Group is as prepared as it can be for a potential no-deal Brexit on 31 October and we have implemented our contingency plans to ensure we can best service our customers over the key Christmas trading period,” the company said.