November 30, 2017 / 1:40 PM / 2 years ago

Marston's shares cheered by profit rise on food and beer sales

Steam rises from the Marston's Brewery in Burton upon Trent, central England, October 14, 2008. REUTERS/Darren Staples

(Reuters) - Marston’s Plc shares rose by nearly 10 percent after the British pub operator said on Thursday that strong sales and tighter cost control helped it post a near 3 percent rise in annual profit.

Rising inflation and muted wage growth has reduced Britons’ appetite for eating and drinking out, but Marston’s, which owns pubs such as Two for One and Carvery, said it had made a strong start to its new year.

Larger rival Greene King on Thursday flagged weakness in consumer spending and higher costs as it reported an 8 percent drop in first-half profit, while Mitchells and Butlers last week reported a fall in profit and scrapped its interim dividend.

Marston’s said its sales growth was led by a strong performance from its food-focused pubs, along with a 30 percent rise in revenue from its brewing business, which includes drinks such as 61 Deep Pale Ale and Lancaster Bomber.

“About 85 percent of our drink costs are fixed into 2018 and (a) large number of those are actually contracted out until 2020,” Marston’s Chief Executive Ralph Findlay said of the measures it has taken to tackle rising costs.

“These fixed-rate forward contract include for lager supplies from international lager brewers such as Heineken and Molson Coors Brewing Co,” Findlay added.

Higher input costs are in part due to the slide in the value of pound since the Brexit vote in June 2016.

Reporting by Rahul B in Bengaluru; editing by Alexander Smith

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