Premium pub owner and brewer Marston's raised a glass to strong growth across the board in its half-year results today, with extra boosts from its beer segment and posh pub food.
Marston's, which has an estate of around 1,600 pubs in the UK, posted growth of 11.5 per cent in group underlying revenue in the first half of 2016, reaching £428.7m, up from £384.5m in the same period of 2015.
Profit before tax was £22.8m, up from a loss of £27.5m in 2015, while earnings per share were 4.2 pence per share.
Marston's performance is in line with expectations, with plans still in place to open 20 pubs over the current financial year, having already opened seven, including two new branches of its Revere bars and five new lodges.
Like-for-like sales across its managed and franchised pubs grew three per cent, while the average profit per pub was 13 per cent in 2016 and up 44 per cent since 2012.
Marston's beer business has also continued to grow strongly, with the group's underlying profit driven by the Thwaites acquisition in March 2015. The company's strong brand portfolio continues to outperform the market with volumes up 22 per cent, and Hobgoblin Gold (launched in 2014) now classed as a "top 15" premium ale.
The company's share price went up by around two per cent during morning trading after the results were announced.
Why it's interesting
Marston's has said it is relatively safe from two pieces of legislation that could affect its business and come into effect in the second half of the year.
The company said it will not be "materially exposed" to potential adverse consequences of the Pubs Code, as leased pubs generate approximately 15 per cent of the company's pub profits, while the added costs of the minimum wage and living wage had been anticipated over time, so the impact over and above Marston's existing forecasts will be "relatively modest".
What Marston's said
Chief executive Ralph Findlay said:
We are encouraged by our first half performance and are on track to meet our expectations for the year. In pubs, we have driven our growth by the organic development of pub-restaurants and franchise-style pubs, and more recently through investment in lodges and premium bars, widening our appeal.
In brewing, we had an excellent first half year and achieved good growth through our industry-leading brands and service.
What others said
Paul Hickman, analyst at Edison Investment Research said: "In a strong first half to March, a highlight was the performance of the beer division, where the acquisition of Thwaites in March 2015 helped drive volumes ahead 22 per cent and operating profit growth of 16 per cent.
"Marston's says that with only 15 per cent of its operations exposed to the MRO (market rent only) legislation expected later this year, under which tenants and leaseholders can opt to exit the beer tie, the effect is not likely to be significant, and these results give assurance of continued growth in earnings and income with relatively low risk."