Food sales help Marston's cope with higher costs

By Matthew Scuffham

LONDON (Reuters) - Pub group and brewer Marston's (MARS.L) said strong food sales were helping it to cope with higher costs, a rise in beer duty and the effects of the smoking ban.

Marston's shares, which have more than halved in value over the past year, rose 3.2 percent to 221-1/4 pence by 11.18 a.m. on Friday, on what Numis Securities analysts described as a "solid" set of results, in the circumstances.

Profit before tax met forecasts with a 15.9 percent fall to 35 million pounds, hit by higher interest costs, but earnings per share were flat at 10 pence.

Comparable sales at the group's 553-strong managed pubs division, which includes the Pitcher & Piano chain, grew by 0.3 percent over the period, including a 7.8 percent rise in like-for-like food sales.

Marston's said it estimates that 65 percent of sales at its managed pubs are now derived from customers for whom dining is the main reason for visiting the pub.

"This in our view, bodes well for this division given the strong forecast growth in the casual dining market over the next five years," said Numis analyst Richard Carter, who has an 'add' recommendation and 237 pence target price on the stock.

The group, which has 2,274 pubs in England and Wales, said its performance during the period had been "resilient".

Britain's pubs have had a tough time recently as economic concerns have forced consumers to cut back on spending. At the same time, firms are having to cope with sharp rises in food and raw material costs, along with the smoking ban.