Marston's warns on outlook for 2008

Marston's has reported lower drink and machine income across its estate as the impact of the smoking ban and consumer confidence pressures continue.

The Midlands-based brewer is the latest group to warn about the trading outlook for 2008, with margins likely to come under pressure as its sales mix moves towards food.

Overall sales were 7.9 per cent ahead of last year for the 16 weeks to January 19 2008, "reflecting the acquisitions of Sovereign Inns, Eldridge Pope and Ringwood Brewery in 2007".

Marston's managed pubs business, Inns & Taverns, saw like-for-like sales up one per cent "against strong comparatives with reported like-for-like sales growth of 7.0 per cent for the same period last year".

Sales were effectively flat in the last 8 weeks to January 19 however, with like-for-like sales 0.1 per cent ahead of last year.

The group said food sales had "continued to show excellent like-for-like sales growth of 9.5 per cent, although higher margin wet sales and machine income were 2.6 per cent and 9.8 per cent below last year respectively.

In Marston's Pub Company, the group's tenanted and leased pub division, like-for-like profit was 0.6 per cent below last year. Growth in rental income was "offset by weak volumes and machine income in line with market trends".

Overall beer volumes were below last year, the brewer said. "However we have continued to increase market share in a weak beer market with regional premium ales from the Jennings and Ringwood breweries showing good growth.

"Costs across the Group have been well controlled notwithstanding inflationary pressures in brewing and food purchasing, but the changes in sales mix described above will continue to have an impact on operating margins."

Marston's said it had met its target of returning £150m to shareholders in the 2007 calendar year via share buybacks.