Corona pandemic cost Marston’s GBP 40 million so far
United Kingdom | Beer and pub operator Marston’s reported a bruising swing to loss in its first half, with sales down GBP 40 million (USD 50 million) due to covid-19.
Turnover in the six months to the end of March 2020 dropped 7.7 percent to GBP 510.5 million (USD 637 million), from GBP 553.1 million in the same period a year ago, Marston’s said. Not enough, it had to book a pre-tax loss of GBP 33.2 million (USD 41 million) from a GBP 16.3 million profit a year ago. Marston’s operates 1,370 pubs and 30 lodges.
The firm reported on 26 June 2020 that revenue had been in line with the prior year before covid-19 began to grip the market in March and forced the UK government to impose lockdown measures.
Even after the official reopening of pubs on 4 July, the “initial revenue and earnings profile” is uncertain, the firm said. Only 85 percent to 90 percent of its pubs plan to reopen.
Splitting off brewing
The pandemic has compelled Marston’s to turn to cost-cutting. At one point, it furloughed 93 percent of its 14,000 strong workforce, with the remaining employees taking a 20 percent salary cut. Marston’s won’t pay a dividend for its financial year 2020.
On the bright side, Marston’s thinks that the joint venture for brewing and distribution in the UK with Carlsberg, which was announced in May, positions the company well for the future. Once it is completed in the third quarter this year, Marston’s will be a focussed pub and accommodation business with a significantly strengthened balance sheet.
The pub operator said it will receive a 40 percent stake in the Carlsberg Marston's Brewing Company, plus a cash payment of up to GBP 273 million. The deal values Marston’s brewing business at GBP 580 million (or roughly 13 times its 2019 EBITDA) and the Carlsberg UK brewing business at GBP 200 million (USD 250 million). The joint venture is expected to create cost synergies of GBP 24 million.
