Marston's profit sunk by summer floods

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The Independent Online

The pub group Marston's reported a nasty hit to its annual profits after 150 of its pubs were closed in the summer following severe flooding across parts of the country. However, shares in the Pitcher & Piano chain owner jumped 3 per cent yesterday after it reported a 10 per cent rise in earnings per share to 26p alongside figures marginally ahead of City expectations.

The costs of repairing damage to flooded pubs, combined with the impact of higher interest rates, meant pre-tax profits fell from 101.5m to 98m over the year to 29 September. But turnover increased 9.6 per cent to 652.8m on the back of the group's acquisition of Sovereign Inns, Eldridge Pope and Ringwood Brewery.

Marston's has invested 20m in preparing its estate for the effects of the smoking ban, with an improved food offering and outside areas. Some 90 per cent of its 500 pubs already had terraces and gardens. Reflecting the changing character of the pub as more non-smokers come to dine, like-for-like food sales grew 13 per cent over the period and now account for 34 per cent of retail sales. Marston's said that, taking into account drink sales, some 65 per cent of total sales are "now made to customers for whom dining is the primary reason for visiting the pub".

Its chief executive Ralph Findlay struck a note of caution on "consumer confidence, regulatory cost pressures and the short-term impact of the smoking ban".

"We are, however, well positioned to continue to exploit current trends, including the continuing growth in casual dining," he said. "We regard our value-for-money offers and mid-market position as appropriate for the current economic climate."

Marston's, also known for its flagship Pedigree bitter, said it did not believe the current benefits of Real Estate Investment Trusts (Reits) outweighed the implementation costs or their increased risk. Last week, the group executed a 330m refinancing backed by its property portfolio.