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Pub companies see the future as the glass half full despite huge losses

UK Pubs positive

The ravages of the coronavirus pandemic were laid bare yesterday as two of Britain’s biggest pub companies reported cumulative half-year losses of more than £300 million and £1.1 billion of lost sales.

Mitchells & Butlers, which owns the All Bar One and Harvester chains, slumped to a pre-tax loss of £200 million, almost double the £121 million loss in the first half of last year, while pre-tax losses at Marston’s deepened from £31.1 million to £105.5 million.

Despite the red ink, both companies expressed optimism over prospects after the return of outdoor trading last month and this week’s restoration of indoor service, albeit with restrictions.

Phil Urban, M&B’s chief executive, said the first two days of trading indoors had been excellent. “Bookings were through the roof with people coming for meals with friends and family for the first time in a very long while,” he said.

“But I suspect it will tail away and it’ll be three weeks before we’ll know where we’re really at.”

Urban, 58, said he was not surprised by the growing fears that the government may not lift all remaining restrictions next month. “I’ve always been slightly sceptical about June 21, purely because over the past year we’ve had ever-moving goalposts. It would obviously be very unhelpful if they prolonged the restrictions because as a sector we can’t return to real profitability until they are lifted.”

Ralph Findlay, Marston’s chief executive, said that while turnover in the half-year to April 3 had fallen from £343.3 million to £55.1 million, trading since April 12 had been better than he had expected: “We traded at about 80 per cent of 2019 sales, which I think was extraordinary, actually. We also broke even in April, which was again something I didn’t expect.”

Findlay, 60, who will hand over as chief executive to Andrew Andrea, Marston’s finance chief, in October, cautioned against reading too much into the doubts over the lifting of restrictions on June 21. “We’ve just got to wait to see the data, and hopefully that will get us to the lifting of the restrictions.”

M&B, created in 2003 through a demerger from the old Bass brewing empire, has 1,750 venues under brands such as Miller & Carter and Ember Inns, of which 44 are in Germany. Its workforce of about 43,000 has fallen by about 20 per cent, although it has started hiring again.

In the half-year to April 10, its revenues tumbled from £1.04 billion to £219 million, although it recently strengthened its balance sheet by raising £351 million of new equity.

Marston’s, which rejected a 105p-a-share bid from Platinum Equity Advisors in February, has about 1,500 managed, franchised and leased pubs and 13,5000 employees.

It opted not to bring 2,150 pub-based staff members back from furlough and took the first step in exiting brewing by injecting its beer business into a joint venture with Carlsberg. The £273 million of cash from the deal puts it on target to cut its debt below £1 billion by 2025.

Shares in Marston’s fell 5p, or 5.3 per cent, to 90¼p, while M&B lost 3½p, or 1.1 per cent, to 306½p.

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Pub companies see the future as the glass half full despite huge losses

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