Marston's well positioned to exploit market

April 3, 2008: Releasing a half-yearly trading statement, Marston's is cautious about business for the rest of the year, but feels the company is in good shape to ride out any economic difficulties.

In Marston’s Inns & Taverns, its managed pub division, like-for-like sales for the 24 weeks to March 15, 2008, were 0.3% above last year against strong comparatives, with reported like-for-like sales growth of 7% over the same period last year. Food sales have continued to show growth, up 7.8% in the same 24-week period, although higher margin wet sales and machine income were 3.1% and 10.3% below last year respectively.

The new build programme continues to generate "attractive" returns, says the company, with eight new pubs opened in the first half-year, and a further 12 expected to open in the second half.

In Marston’s Pub Company, the tenanted and leased pub division, like-for-like profit was slightly below last year in the period, with growth in rental income offset by volumes and machine income, in line with market trends.

In Marston’s Beer Company, while overall volumes remain below last year, we have increased market share with continued good performance in the premium ale segment.

A spokesman for the board said: "In our interim results statement, due to be issued on May 23, 2008, we expect to report group sales up by around 4% compared to last year for the 26-week period, reflecting the acquisitions of Sovereign Inns, Eldridge Pope and Ringwood Brewery in 2007.

"Operating profit (before interest and taxation) is expected to be in line with last year, although profit before taxation will reflect the higher interest costs
associated with the £150 million share buy-back programme in 2007. Earnings per share will also reflect the related reduction of around 9.5% in the average number of shares in issue and an expected lower underlying rate of taxation. Underlying cash generation remains strong, with net debt estimated to be approximately £1.27 billion at the half year-end.

"We remain cautious about the outlook for 2008, and the recent increase in beer duty adds to the pressures on tenants and free trade operators in an already challenging trading environment.

"However, with our high-quality pub estate and our continuing investment in new-build pubs, we are well positioned to exploit favourable trends, including market growth in casual dining, and our value-for-money offers and mid-market position are well suited to the current economic climate. Notwithstanding the current testing market conditions, our expectations for the financial year as a whole remain unchanged."