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Pub bosses hail ‘phenomenal’ trading but warn financial recovery depends on June 21 full reopening

·3-min read
<p>Both Mitchells & Butlers and Marston’s reported steep half-year losses on Wednesday</p> (Marston’s)

Both Mitchells & Butlers and Marston’s reported steep half-year losses on Wednesday

(Marston’s)

Bosses at two of Britain's biggest pubcos today hailed "phenomenal" and "pleasantly surprising" reopening trading, but reiterated warnings that a June 21 full return to normal is essential for profitable operations as they reported large lockdown losses.

Marston's, which reopened 70% of its 1500-strong pubs estate on April 12, revealed it broke even last month, trading at around 80% of 2019 levels despite outdoor-only service.

Chief executive Ralph Findlay said this shows there "genuinely is pent up demand for people to go out".

Meanwhile, Phil Urban, the CEO of All Bar One owner Mitchells & Butlers, said it “finally feels like we're on the way back now".

M&B opened a tenth of its 1,700-plus estate on April 12, building to 98% reopened on Monday. The FTSE 250 firm continued to trade at an overall loss with al-fresco service, and today reported a £200 million pre-tax loss for the 28 weeks to April 10.

Long-time CEO Ralph Findlay said that he is very confident Marston’s will “do very well” under the leadership of CFO Andrew Andrea, who is set to take over in OctoberRoy Kilcullen/rkp.uk.com
Long-time CEO Ralph Findlay said that he is very confident Marston’s will “do very well” under the leadership of CFO Andrew Andrea, who is set to take over in OctoberRoy Kilcullen/rkp.uk.com

M&B was burning through around £30 million per month in lockdown, and recently received a £351 million equity injection from a consortium of its major shareholders to help it ride out the pandemic.

Urban said the injection has left it in "a good position", allowing executives to clear down debts and "leave some room to manoeuvre" and reinvest.

The CEO said the first two weeks of outdoor trading were "phenomenal" and that sales when pubs reopened for indoor service on Monday were "very good", but warned: "The sector as a whole, it can't trade profitably until these restrictions are lifted, and hopefully that is on June 21... If we're not able to trade back to our full in June, the Government still need to support this sector."

"I'm optimistic, but we're not forward guiding," he said. "Once the restrictions are lifted I am confident we will trade well and get back to where we were quite quickly."

M&B was burning through around £30 million per month in lockdownPress image
M&B was burning through around £30 million per month in lockdownPress image

Marston's recorded a first half underlying pre-tax loss of £122.4 million, but Findlay highlighted that the group saw a non-underlying profit due to the sale of its beer business into its joint venture with brewing giant Carlsberg in the period.

Findlay, who plans to stand down after 20 years in October, said Marston's expects to continue just to break even despite indoor service resuming. He put this down to social distancing restrictions cutting around 30% of pub capacity, and additional costs such as table-only service.

He said: "If we can continue to break even until June 21 that will be a good result.

"We will see more sales this week, and it will continue to build I think, but it's going to be tough until these restrictions are removed."

Findlay, said that his is "confident" of a full financial recovery, and that the firm's internal goal is "to get back to pre-Covid levels in 2022".

The long-time CEO added that he is very confident Marston’s will "do very well" under the leadership of CFO Andrew Andrea, who is set to take over at the start of the next financial year.

Leisure analysts Douglas Jack and Ivor Jones at Peel Hunt said that M&B's results came in slightly above expectations, and highlighted Marston's fall in net debts - saying the pubco's debt reduction momentum "should rebuild over the next few months, growing equity value in the process".

Marston's shares were down 2.89%, while M&B's were down 2.88%, on Wednesday morning.

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