Marston’s reports a £40 million hit to sales on COVID-19 restrictions

In an announcement on Friday, Marston’s Plc (LON: MARS) expressed plans of reopening its UK restaurants and pubs on 4^th July, after months of inactivity due to the Coronavirus pandemic that has so far infected more than 300,000 people in the United Kingdom and caused over 43,500 deaths. COVID-19 restrictions, the company added, resulted in an about £40 million hit to its sales.

Share of the company dropped a little under 10% on market open on Friday. At 58 pence per share, Marston’s is currently more than 50% down year to date in the stock market after recovering from an even lower 22 per share in March. Learn more about how to choose winning stocks.

Marston’s to merge its brewing business with Carlsberg UK

The pandemic associated uncertainty, Marston’s said, still makes it difficult to meaningfully predict the company’s performance in the upcoming months. As per the company:

“Looking forward, it is clear that there will be contraction of supply in the eating and drinking out market as a consequence of COVID-19.”

Marston’s recently approached Carlsberg for a potential merger of its brewing business with the UK arm of the Danish brewer. The deal is likely to strengthen its balance sheet by £273 million.

The British pub operator said on Friday that its underlying pre-tax profit came in at £9.4 million in the first half of the current financial year, versus a much higher £34.2 million in the same period last year. At £510.5 million, Marston’s revenue saw an 8% decline in the 6 months that ended on 31^st March.

Marston’s slashed its monthly cash burn to £10 million

The owner of prominent beer brands like Hobgoblin, Pedigree, and Lancaster Bomber, boasted to have slashed its cash burn (monthly) to £10 million. It expressed confidence that its recently announced partnership with Carlsberg UK will greatly contribute to speeding up its post-pandemic recovery.

In a bid to shore up finances amidst the ongoing health crisis, Marston’s suspended its dividend, slashed executives’ salaries, and placed more than 13,000 workers (about 93% of the workforce) on furlough earlier this year. Excluding lease liabilities, the Wolverhampton-based company also minimised its debt from around £1.42 billion to £1.38 billion, as of 28^th March.

Marston’s performed fairly upbeat in the stock market last year with an annual gain of about 35%. At the time of writing, the British brewer has a market cap of £371.93 million.