Marston's investors cheer as profits rise thanks to new pub openings and disposals programme is 'largely complete'

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Brewer and pub group Marston’s cheered investors today after it reported rising profits and said its programme of pub disposals was ‘largely complete’.

The maker of Hobgoblin and Pedigree ales said pretax profits for its full year to October 3 rose 10 per cent to £91.5million, with revenues 7 per cent higher at £845.5million thanks to new pub openings and a strong performance from its brewing arm.

Marston’s, which currently owns 1,600 pubs across the UK, said it was on track to open at least another 20 new-build pubs this year, with a pipeline in key regional locations.

Upbeat: Marston's said profits rose thanks to new pub openings and a strong performance by its brewing arm

Shares in the FTSE 250-listed company were up 3 per cent, or 4.7p to 164.2p in late morning trade.

Overall, since 2013 when it launched a three-year strategy, Marston’s has sold or closed down around 450 pubs and opened 143 more profitable pub-restaurants.

Marston's average profit per pub has increased to around £100,000, up around 40 per cent since 2012, the group said. 

The group's chief executive, Ralph Findlay said: ‘The three year transformation of our pub portfolio towards an optimised estate is now largely complete.

‘We approach 2016 with our business successfully positioned at the forefront of industry trends with high quality, well-invested pub assets which are fit for the future.’

Marston’s upbeat results are in contrast with yesterday’s gloomy update from rival Mitchell & Butlers, which posted a 1.6 per cent fall in like-for-like sales over the past eight weeks and warned of soaring staff costs from the introduction of the national living wage next year.

Marston’s said the impact of the new wage legislation would be ‘moderate’ for them as 60 per cent of its workforce is under 25-years-old – and businesses will only be forced to raise pay per hour to £7.20 for over-25s from next April.

The firm also increased its dividend for the year by 4.5 per cent to 7p per share and said its new financial year had started well. 

National living wage: Marston’s said the impact of the new legislation would be ‘moderate’ as 60% of its workforce is under 25-years-old, and businesses will only be forced to raise pay per hour for over-25s

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said Marston's results provided reason for cheer.

‘Earnings and like-for-like sales growth have been achieved across all businesses, with profits materialising at the upper end of forecasts. The group’s disposal programme of smaller drink-led pubs is largely complete, whilst a pipeline of higher profit new-build pub-restaurants continues to be pursued.

‘The acquisition of the Thwaites' beer brands boosted volumes for its Brewing division, with volumes for its take home market performing strongly.’

However, he added that the introduction of the national living wage would mean higher costs, albeit moderated, and that competition in the pub-restaurants arena remained intense.

‘On balance, and in contrast to recent cautious outlooks comments from rival Mitchells & Butlers, analyst consensus opinion for a strong hold could come under some upward pressure,’ Bowman said.