The result reflects the impact of trading restrictions in December and January as a result of the Omicron Covid variant and the corresponding impact on consumer sentiment in the first half of the financial year (FY).
Meanwhile, total retail sales in the group’s managed and franchise pubs were up 2% v FY2019. Drink sales have continued to outperform food sales, reinforcing the trading resilience of its predominantly community pub estate.
Lfl sales were encouraging and continued to improve in the 10 weeks from 24 July to 1 October: being 3% up v FY2019 and 4% up on 2021. This has been attributed to drink sales while food sales were weaker due to the hot weather.
Affordable pub experiences
The group remains confident its pub strategy is beginning to deliver positive momentum and said it is committed to delivering affordable pub experiences.
On its energy costs, Marston’s has its gas price fixed until the end of March 2025 and while electricity costs in the last 10 weeks of FY2022 have been higher than originally expected the commodity is hedged for the first half of FY2023.
Marston’s net borrowings (excluding IFRS16 commitments) as of 1 October were £1.216bn, which is £16m below last year and £30m lower than the first half of FY2022.
During the year, the £50m deferred duty/VAT paid was offset by a contingent consideration of £28m from Carlsberg Marston’s Brewing Company (CMBC) and a payment by CMBC of £19.4m, reflecting a one-off working capital movement recognised in CMBC’s first FY half (January 2022 to June 2022) results.
At the year end, the group had £65m of headroom against its £280m bank facility and £10m of cash.
Debt reduction strategy
Marston’s chief executive Andrew Andrea said: “This is a good performance with the trading momentum we experienced in the summer continuing. Marston’s has a long-term capital structure that is well suited to the current market environment and we remain committed to our debt reduction strategy with which we continue to make progress. We are managing cost inflation well with food, drink and energy costs covered for the immediate future.
“While we are not complacent and can’t predict what the future will hold, what is clear is that people want – and are continuing – to visit our predominantly community pubs. The level of customer demand we are experiencing is encouraging, which underpins our confidence that our strategy is working and we are making positive progress in that regard.
“Looking forward, we are primed to maximise the trading opportunities provided by the forthcoming World Cup and first restriction-free Christmas in three years. Marston’s is in good shape and well positioned to navigate the future.”