Marston's pub profits down six per cent

Midlands brewer Marston's is the latest to highlight the impact of the recession on the pub sector, reporting profits across its tenanted and leased estate down six per cent in the 15 weeks to January 17, 2009.

As the recession - due to be officially confirmed today by government figures - takes hold Marston's management said the economic outlook for 2009 "remained difficult".

The situation for the pub sector would be made worse by the proposed hike in beer duty, the group said.

Expressing concern that the government would once again raise duty in the next Budget, Marston's said any increase 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 Beer Tax' campaign," it noted.

The effects of the economic downturn saw both Marston's leased and managed pub divisions reporting a decline in sales.

Its managed business, Inns & Taverns, saw overall revenues down 2.9 per cent, with a slight increase in Christmas and New Year activity being offset by a "subdued" January.

Despite the downturn in leased and tenanted pub profits, Marston's said those establishments let on substantive agreements had "achieved profit growth overall".

The brewer said it was offering its tenanted and leased estate financial support where appropriate, including absorbing recent price rises from the major brewers and pegging the wholesale price of its own brewed beers until autumn 2009 "at the earliest".

The level of financial support had "not increased significantly since the end of the last financial year" the group said.

It added that its own brewed beer volumes were ahead of the same period last year, thanks in part to the acquisition of the Wychwood brewery operation.

Marston's confirmed that it hoped to offset around £12m of cost increases following recent changes to its corporate headquarters, as well as signing new utility deals.

With a drive to reduce debt - currently net debt stands at £1.27bn - the group revealed it would cut capital expenditure from £117m in 2008 to £50m in 2009.