Marston's toasts rising profits despite concerns over Brexit
Premium pubs and beer business Marston's has raised a glass to rising profits despite looming concerns that Brexit could knock consumer confidence and raise costs for the sector.
The Two For One and Pitcher & Piano owner reported a 7% jump in underlying revenue to £905.8 million, and a 7% jump in underlying pre-tax profit to £98 million in the year to October 1.
Average profit per pub jumped 8%, as like-for-like sales in its premium and gastro-pub business rose 2.3%, while like-for-like sales in local taverns - which drew higher drinks than foods sales - increased 2.7%.
It helped offset the impact of disposals of a number of non-core pubs, the sale of which generated £45.9 million in cash.
Marston's - which brews beers including Hobgoblin, Wainwright and Lancaster Bomber - saw its share of the premium bottled ale market rise to 27%, and to 20% in the premium cask ale market.
Chief executive Ralph Findlay said: "We have delivered another year of good growth across the business, with the outstanding performance of our beer company particularly encouraging.
"Trading has been solid in the first few weeks of the new financial year and we have seen no discernible change to the trends experienced in 2016. The majority of our major product cost lines are contracted for 2017 and well into 2018."
The Wolverhampton-based pub and brewer acknowledged there are "wider concerns regarding the possible impact of Brexit", particularly on consumer sentiment and input costs following the collapse in sterling since the vote.
Sterling has fallen 17% against the dollar and nearly 10% against the euro since the referendum on June 23.
However, the company confirmed that it is hedged against currency fluctuations, with forward contracts in place into 2018.
Marston's also assured that it has planned for modest increases in business rates next year, but said it was protected in part due to its low exposure on the high street and city centres.
"We are well placed to continue our track record of growth and to make further progress against our key financial objectives," the company said.
Greg Johnson, an equity analyst at Shore Capital Markets, said: "The disposal and capital investment programme has re-positioned Marston's towards a higher quality estate, with greater direct control and a burgeoning beer business.
"The trading backdrop appears stable (albeit uncertain) and costs remain manageable in our view. The ongoing new build programme is delivering attractive returns and we estimate is capable of delivering mid-single digit earnings growth and further margin progression."
Shares fell 2.5% in afternoon trading.
Marston's employs around 14,000 people across 1,559 pubs in the UK.