MARSTON’S has signalled the outlook for costs and consumer confidence is “steadily improving” as it underlined the resilience of pub-goers against the backdrop of the cost-of-living crisis.

The company, which has 1,440 pubs around the UK, highlighted strong trading over Easter and the first two May bank holiday weekends as it forecast macro-economic conditions were becoming “increasingly stable”.

That came as it reported that pub operating profit had risen by eight per cent to £43.1 million in the first half, while like-for-like sales were up 10.7% on last year and 17.9% on the same period in 2020.

Revenue for the 26 weeks ended April 1 came in 10.1% higher at £407m, reflecting the “continued rebuilding of trading momentum post-Omicron”, and pre-tax losses narrowed to £3.6m from £7.5m.

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And Marston’s, which has 20 pubs in Scotland, declared current trading was positive, with like-for-like sales in the last six weeks up 7.9% up on the same period of 2022 after strong Easter and May bank holiday trading.

However, shareholders were told that there will be no dividend this year because of the “continued macroeconomic uncertainty”. Shares closed down 6.3% at 34.8p.

Chief executive Andrew Andrea said: “The strategy which we outlined 18 months ago is progressing well and generating positive results which is pleasing. Our H1 performance clearly demonstrates that consumers remain as keen as ever to celebrate - and socialise within - the Great British pub.

“The macro-environment is becoming increasingly stable and recent evidence suggests that both the cost outlook, and consumer confidence, are steadily improving. The actions we are taking are building a demonstrably better business and Marston’s predominantly community pub estate continues to benefit from changing consumer lifestyles.”

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Marston’s said it was on-track to meet its targets for operating profit, cash generation and debt reduction over the full year, noting that the seasonal nature of its business means that the majority of its profits are typically generated in the second half.

The company told the City that it was continuing to manage inflationary challenges within its control. It said energy costs have been secured with electricity fixed until the end of the first half of 2024, and gas until the end of 2025, adding that other costs have been offset by efficiencies and pricing strategies.

Martson’s said: “We remain mindful of the current macroeconomic environment, with the cost-of-living crisis and the resulting challenges this brings in respect of cost inflation and the potential impact on disposable income, as well as potential supply issues.

"However, our pubs have demonstrated their resilience time and time again and, to date, there is little in our trading performance to suggest that there has been a change to consumer behaviour; our guests still want to go out and have an affordable treat in a Marston’s pub."

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The company said it is targeting sales of £1 billion and reducing group debt to below £1bn by 2026.

Net debt fell in the first half by £12.1m to £1.2bn, helped by £24.3m of pub disposals and a £10.6m dividend received from the Carlsberg Marston’s Brewing Company, a joint venture set up following the merger of Marston’s brewing business with Carlsberg UK. Marston’s received profits of £2.2m from the joint venture, in which it holds a 40% stake, in the first half.

A company compiled consensus of analysts forecasts that Marston's will make pre-tax profits of around £44.2m this year, with earnings weighted to the second half.

Greg Johnson at Shore Capital gave Martson’s a buy rating and said its forecast for operating profit at the company were likely to remain unchanged. Shore forecasts the company will make an adjusted pre-tax profit of £51.9m, up from £27.7m.

The analyst added that shares in Martson’s are down 7% in the year to date, “sharply underperforming peers such as Mitchells and Butlers (+39%) and JD Wetherspoon (+65%)" but noted that its performance in the first half did not merit “such a divergence”.

He said: “We see the H1 results as consistent with our 3Rs investment case: reduction (in net debt), recovery (in profitability back towards pre-Covid levels) and realising (value within CMBC).”