British pub group Marston's plc has something to raise its glass to following the 1,400-strong chain’s full-year results for 2022.
Chief executive Andrew Andrea celebrated “a return to profit and steady progress with our debt reduction strategy,” underscored by a doubling of revenue growth and earnings of 4.3p per share compared to a painful loss of 13.6p in 2021.
Operating profit increased from £5.7mln to £115mln, while cash flows for the year came to £26mln.
These cash flows were substantially down year on year, though 2021 figures were flattered by the £228mln in net proceeds from the merger of its brewing business with Carlsberg UK.
On top of the bumper results, Marston’s reported that sales in the new financial year have actually increased 5% from pre-pandemic levels in 2019, due in no small part to an off-season World Cup schedule, while Christmas bookings are also above expectations.
But those operating profits still trail 2019 levels by over 35%, underscoring the considerable impact inflation is having on the hospitality sector’s margins.
Read more: Supermarket price inflation dips for first time in 21 months
Marston’s and its competitors will face even tighter margin pressure in the new year, exasperated by increases in national minimum and living wages scheduled for April 2023, as well as sticky energy prices (though Marston’s benefits from fixed gas contracts until March 2025).
“We are working hard to mitigate as many of these cost pressures as possible and we expect to offset some of these higher levels of inflation through a combination of cost efficiencies and pricing strategies,” said Marston’s in its 2023 outlook.
In plain English: More expensive pints for punters.
Marston’s portfolio includes premium outlets under the Pitcher & Piano and Revere brands, destination pubs under the Marston’s Two for One, Generous George, Milestone Rotisserie and Milestone Carvery brands, and a range on community pubs and inns.
Despite the strong earnings call, no dividend was announced in respect of the financial year, “given the disruption to trading and the road to recovery from Covid-19”.