Marston's profits down 15.9%

Marston's has reported a 15.9% drop in profits for the 26 weeks to 29 March, reflecting high interest rates from its £150m share buyback.

Profit before tax and exceptional items fell to £35m from £41.6m last year and the brewer and operator said it remained cautious about the year ahead as the smoke ban, weak consumer confidence and inflation continues to bite.

Like-for-like sales at its managed division, Marston's Inns and Taverns, increased 0.3% with food sales up 7.8% on a comparable basis.

Food now accounts for 35% of all sales in the managed division with 65% of turnover estimated to be generated from customers who visit the pub primarily to eat.

But like-for-like drinks sales were 3.1% below last year and machine income sales were 10.3% down.

Marston's also warned it expected food inflation to run at 8% over the next year - meaning an increase in costs by £1.5m in the second half year and to £3m next year.

Tenants​

Following the disposal of 279 pubs to aAim Group last year, average profit (EBITDA) per pub increased by 10.1% in the first half of the year at its tenanted division, Marston's Pub Company, but like-for-like profit per pub was down 0.6% on last year.

Beer volumes at Marston's Beer Company were down 2.5% for its own brands but there was premium ale growth of 7.2%.

"We remain cautious about the outlook for 2008, as consumer confidence remains weak and cost inflation is at higher levels than we have seen for some years,"​ said chief executive Ralph Findlay (pictured with Beer Company MD Alastair Darby​) .

"Nevertheless we expect our relative performance against last year to improve over the summer months as the anniversary of the smoking ban in England on 1 July last year passes, and as a consequence of the impact of flooding last year."​

He added: "Our integrated business model provides us with operational flexibility and a wider range of investment opportunities, and has enabled us to offset significant increases in the cost of food, labour and brewing raw materials."​

Reit​

Marston's confiemed that it had examined the possibility of conversion to a Real Estate Investment Trust (Reit) but did not believe the potential benefits outweighed the implementation costs or risk at present.

Chairman David Thompson said the company was "disappointed"​ with the recent duty rise from the Government.

"The recent increase in beer duty by the Government has added further costs to pubs in already challenging trading conditions, and has contributed to the widening price gap between pubs and supermarkets. ​

"As a pub operator and brewer we promote the responsible, supervised retailing of alcohol and are disappointed that the effect of the Government's tax increase is likely to undermine this objective."