Marston’s saw revenues plunge during the first half, after lockdown restrictions closed its pubs and pushed it deeper into the red.
Marston’s 1,500-strong estate was either closed or had trading restricted during the entire 26-week period to 3 April. As a result, total interim revenues fell 84% to £55m, while the underlying pre-tax loss was £122.4m. That compares to a loss of £800,000 a year previously.
However, net cash inflow was £110m – against £3m in 2020 – after Marston’s received £228m net proceeds from the disposal of its beer company, and net profits were £199.3m against net losses of £28.0m in 2020. Marston’s agreed to combine its brewing business with Carlsberg UK in a joint venture deal last year.
Ralph Findlay, outgoing chief executive, said: “Despite the challenges of the last year, the actions we have taken have ensured that Marston’s has emerged a stronger and more focused business, with a substantially strengthened balance sheet, a 40% stake in Carlsberg Marston’s Brewing Company and a clear vision for the future.
“While still early days, trading has been encouraging since we were permitted to open our doors for outdoor trading last month.”
Marston’s said that 710 of its pubs had reopened on 12 April, when restrictions on outside hospitality were lifted in England, before the rest of the estate opened 17 May, when indoor hospitality was once again allowed.
Like-for-like sales were at 77% of pre-Covid levels, Marston’s said, with April sales “sufficient to deliver breakeven group earnings before interest, tax, depreciation and amortisation”.
Anna Barnfather, analyst at Liberum, said: “[Marston’s] target to reduce borrowings below £1bn has slipped to 2025 from 2024 previously, an outcome of continued trading restrictions and lockdown months, and no dividends will be paid this year.
“It is suited to a trading recovery ahead, with 90% of pubs have outside trading areas and only 10% of the estate is exposed to city centres. The slip in timetable for debt reduction is unhelpful, but offset by very encouraging trading. We retain our ‘hold’.”
Douglas Jack, analyst at Peel Hunt, said: “We estimate a return to 9.8x enterprise value/EBITDA would equate to a share price of 134p. Any increase in debt reduction or the recycling of cash into conversion investment within the organic estate, boosting EBITDA, should increase this equity upside.”
Peel Hunt has a ‘buy’ rating and a target price of 125p on Marston’s.
As at 1015 BST, shares in Marston’s were off 3% at 92.2p.
Findlay, who has been chief executive since 2001, is retiring in October. He will be replaced by current financial officer Andrew Andrea.
