Marston's: profits down 6% at leased pubs
Like-for-like profits at Marston's tenanted and leased pubs slumped 6% on last year for the 15 weeks to 17 January.
The brewer and operator said that like-for-like sales at its managed houses were also down 2.9% on last year with January trading "more subdued" than Christmas and New Year.
As exclusively revealed in the Morning Advertiser last week, Marston's is to absorb all wholesale beer price rises and will not increase the price of its own beers until autumn 2009 in order to help its tenants.
"Good, well positioned pubs with sustainable rents operated by skilled and committed licensees continue to trade well, as demonstrated by the fact that pubs let on the basis of substantive agreements achieved profit growth overall," it said.
"We continue to provide significant commercial support for all tenants and lessees, and have introduced a range of initiatives to stimulate business development including more flexible agreements.
"Financial support for tenants and lessees, including additional discounts and rent alleviation, is also provided where appropriate. The cost of financial support in the first quarter has not increased significantly since the end of the last financial year.
"We have also announced to tenants and lessees that we will mitigate the impact of recent substantial price increases from the major lager brewers, and that we have no plans to increase the wholesale price of our own brewed beers until the autumn of 2009 at the earliest. These measures will help to ensure that our tenants and lessees are better placed to protect their sales and margins in a competitive environment, and, therefore, will also contribute to continuing stability."
Beer volumes at Marston's Beer Company are ahead of last year thanks to the acquisition of Wychwood Brewery in April 2008. As previously reported, Marston's expects to be able to substantially mitigate cost increases of around £12m in 2009 as a result of recent fixed utility contracts, new purchasing agreements and reductions to central overheads.
Marston's is to scale down its capital expenditure programme to around £50m — compared to £117m last year — principally as a result of the reduction in the number of new pub openings.
Net debt stood at £1.27bn on 4 October with around £240m drawn against a £400m facility. "Recognising current economic conditions, it is our intention to reduce net debt over time," it said.
Outlook
"The economic environment remains difficult. The Government raised taxes significantly through higher levels of beer duty in 2008, and we are concerned that further increases will be levied in 2009. This would present additional significant challenges to our tenants, lessees and free trade customers. We strongly support industry bodies, including the British Beer & Pub Association, in campaigning for a reduction in beer duty through the 'Axe the Tax' campaign.
"We remain cautious about the outlook for the remainder of 2009. However, we believe that our high quality pub estate, our value for money offers, and a consistent approach to dealing fairly with our tenants on the basis of shared risks and reward, leave us relatively well positioned in the longer term."
