10th Dec 2020 12:33
(Alliance News) - Marston's PLC on Thursday reported a significantly widened annual loss, with the firm struggling following the closure of pubs across the UK in an attempt to curb the spread of Covid-19.
Shares in the brewery, pub and hotel operator were down 5.5% in London on Thursday at 66.15 pence each. The price has almost halved so far in 2020.
For the 53 weeks to October 3, Marston's recorded a pretax loss of GBP388.7 million, widened significantly from a GBP44.7 million loss the year before.
Revenue slipped to GBP821.0 million from GBP1.17 billion, with Pubs & Bars revenue falling to GBP515.5 million from GBP784.2 million and Brewing revenue dropped to GBP305.5 million from GBP389.3 million.
The Wolverhampton, England-based company noted, however, that like-for-like sales in the fourth quarter were at 90% of the same period in 2019, which was 7% ahead of the wider UK pub sector.
Marston's operating expenses rose to GBP801.0 million from GBP703.3 million.
The firm suspended dividend payments during the period, and noted it has not yet a decision over the timing of reinstatement of dividends.
"Our dividend policy moving forwards will be based on cash cover, rather than on historical earnings cover, and it is likely that any dividends paid should be covered by underlying cash flow after principal repayments of securitised bonds," the company explained.
Marston's said sales were badly hurt by the 15-week closure of pubs from the end of March.
Chief Executive Ralph Findlay said: "2020 has been an extraordinarily difficult year for the pub and wider hospitality sector which has been particularly hard hit by the pandemic."
He continued: "Whilst short-term uncertainty remains, we have taken swift action to future-proof the business to withstand the challenges presented by the pandemic and Marston's has emerged a significantly stronger business, with a substantially strengthened balance sheet and well placed to rebuild trading momentum when restrictions are eased. The roll out of the vaccine is clearly critical to that, but in the meantime the sector continues to face major challenges and government support will need to continue in order for many viable businesses to survive."
Looking ahead, Marston's said it has entered the current year "fit for the future" as it moves its focus away from brewing.
"We look forward to realising the potential of the group's brewing JV with Carlsberg and wish the team at CMBC every success," Findlay said.
Back in May, Marston's and Carlsberg UK Holdings Ltd announced the formation of a new joint venture for brewing and distribution in the UK. Under the agreement, Marston's received a 40% stake in the Carlsberg Marston's Brewing Co joint venture, plus a balancing cash payment of up to GBP273 million.
The joint venture valued Marston's brewing business at GBP580 million and Carlsberg's UK brewing business at GBP200 million. Marston's had said it would use the proceeds from the joint venture to cut debts. The deal was approved by the UK Competition & Markets Authority in October.
CEO Findlay added: "There is clear evidence that consumer demand for our pubs remains strong and our geography, as a predominantly community pub operator with 90% of our well invested, high quality pubs located outside city centres, leaves Marston's well placed to leverage the market opportunities available to us over the medium to longer term."
By Paul McGowan; [email protected]
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