Marston's claims new pubs will boost its prospects

Despite sounding cautious about short term prospects for the economy Midlands brewer Marston's believes its new pub building programme will help it through the worst of the recession.

In an interim management statement issued today Marston's said the programme, funded by the £165m rights issue recently given the nod by shareholders, was a "significant development opportunity from which we aim to deliver good and sustainable returns".

The group hoped to build and open nine new pubs by the end of the current financial year, it added, and 15 new sites in 2010.

"Although we remain cautious because of the current challenging economic and trading environment, we are confident of meeting our expectations for the year," Marston's said.

On the trading front, Marston's said it had stemmed a decline in sales in the second half of its financial year, with its managed pub division in particular boosted by rising food sales.

Marston's said overall group turnover was 1.9 per cent below last year for the 43 week period to August 1, 2009, compared to the 2.8 per cent decline previously reported for the 26 weeks ended April 4, 2009.

Like-for-like sales in Marston's Inns & Taverns, its 500-strong managed operation, were 1.2 per cent down, with food sales up 2.2 per cent in the 43 week period and six per cent up since August 1, 2009.

Food sales now accounted for 38 per cent of turnover in the managed pub estate, Marston's said.

Across its 1,700-strong tenanted pub estate sales trends "remained unchanged from those previously reported", the group said. At its half year results announcement in May Marston's had said the division witnessed turnover of around seven per cent lower than the previous year.

Marston's said trials of its 'Phoenix' franchise-style rental agreement had proved "encouraging" and would be rolled out across 80 pubs later in the year.

On the brewing front Marston's said in the 43 weeks to 1 August own-brewed ale volumes had increased by around 13 per cent, boosted by the acquisition of the Ringwood operation, with like-for-like market shares in premium cask ale and premium bottled ale up "by around one per cent".

Marston's said it remained on track to raise around £20m through pub disposals during the year and had achieved "overall book value" on sales to date, while £140m of its recent £165m rights issue was to be spent on new pub builds.

Nine new pubs would be constructed before the end of the current financial year, Marston's said.