StockMarketWire.com - Pub owner Marston's warned on profits and said it may not pay an interim dividend, after the UK government urged people to avoid pubs and other hospitality venues to curb the spread of the coronavirus.

The company also said it was in talks with its lenders about potential covenant waivers.

Marston's said it couldn't yet quantify the precise impact on its performance. 'However, we expect a reduction to our expectations for financial year 2020,' it said.

Like-for-like sales had fallen 1% in the 24 weeks to 14 March, though the company said sales were expected to be 'significantly lower' in the coming weeks due to the government's advice.

Marston's is currently in the midst of a debt reduction programme that has seen it stop building new pubs and selling others.

On Wednesday, it said further mitigating actions included significantly cutting capital expenditure for the foreseeable future, reducing overhead and other variable costs and tightly managing stock levels.

'Recognising that tenants and lessees face similar challenges, we have reassured them that we will suspend rent on a case-by-case basis where it is appropriate to do so,' the company said.

Marston's had completed £60m of asset disposals in the year to date and retained its full-year target of £85m-90m.

Marston's said recent statements from the UK Government suggested that the current state of much-reduced social activity was likely to continue for several months at least.

'If that is the case, it is unlikely that an interim dividend will be recommended in May, retaining around £20 million in the business,' it said.

'We have appropriate headroom on both our bank and securitised facilities, supported by a 93% freehold estate.'

'As a consequence of this, and the actions we have taken to date, we believe that we have sufficient liquidity to maintain operations at a materially reduced level of business.'

'In addition, we are having discussions with our banking group about the provision of covenant waivers for the second half-year, in the event these should be required.'

'Whilst at an early stage, those discussions have been constructive.'



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