Marston’s profits plunge as Covid-19 leads to £40m sales hit

Marston’s has said it remains “uncertain” about its short-term financial outlook, after its profits took a £40m hit following lockdown. Its latest update comes ahead of the reopening of its estate on 4 July. The brewer and operator revealed that its underlying profit before tax was £9.4m in the half-year ended 28 March, down from £34.2m the year prior. Its revenue, meanwhile, was £510.5m, down from the £553.1m reported in 2019. Nonetheless, the group saw a net cash flow improvement of £55m, reflecting its progress on debt reduction plans. This figure was also boosted by a £61m disposal through the sale of 168 pubs. It comes as the group announced its shareholders had approved a partnership with Carlsberg UK to launch the Carlsberg Marston’s Brewing Company (CMBC). Marston's will own 40% of CMBC while Carlsberg UK will own 60%. Marston's is also set to receive a cash equalisation payment of up to £273m through the merger, valuing the group at £580m. The proceeds will also be used to further reduce its debt, and the transaction is expected to be completed in the third quarter of the year. Following the merger, the group expects to have a “significantly strengthened balance sheet” Looking ahead, the group said that it was “well placed to recover from the impact of the current position”. Ralph Findlay, CEO, said: "Our immediate priority is to prepare our pubs to reopen on 4 July. Whilst there is short term uncertainty as the sector emerges from lockdown, we are focussed on offering a great guest experience, synonymous with Marston's hospitality, to welcome our customers back into our pubs within a safe trading environment. "The challenges facing the sector should not be underestimated and much rests on consumer confidence which may take time to rebuild.” He added: “As the industry navigates its way out of lockdown, we will continue to urge Government for continued support for pubs and wider hospitality, through the reopening phase and thereafter through business rates relief and cuts to VAT, to protect jobs, the economy and the invaluable role the pub plays in communities nationwide. "Looking ahead, our transformational deal with Carlsberg positions the company well for the future. Post completion, Marston's will be a focussed pub and accommodation business with a significantly strengthened balance sheet, well placed to rebuild trading momentum and leverage the market opportunities available to us over the medium to longer term."