Pubs and brewing group Marston’s (MARS) says it is running ‘ahead of schedule’ with plans to slash net debt by £200m by 2023.
The update emerged alongside full year results to 28 September that show 3% growth in underlying revenues but pre-tax profits down by the same margin, to £101m. This was in line with expectations and that the share price stayed largely flat at 126.9p (down 0.5p) is perhaps a reflection of the 20% rally in the stock since May as investors bet on Marston's becoming a takeover target.
In August rival Greene King was bought out in a £2.7bn deal by CK Noble, the property firm run by Hong Kong's wealthiest man, Li Ka-shing, while the old Enterprise Inns EIG fell into private equity hands earlier this year.
Chief executive Ralph Findley's ambition is to turn Marston's into a high quality business capable of throwing of surplus cash even after dividends and capital expenditure.
DOWNGRADED GUIDANCE
Marston's cut its guidance in a trading update on 15 October.
Ultimately, like-for-like sales growth of 0.8% was better than the underlying market with ‘wet-led’ doing better than food as has been the case over the last few years, while the last seven weeks are ahead of the prior year.
However, the majority of first quarter profit is generated over Christmas and the New Year and the company reckons it is well prepared.
There are some early signs that the over-supply in restaurants in the last few years is starting to reverse with supply down 3%, which should alleviate cost pressures.
SIMPLIFIED OPERATING STRUCTURE
The pubs and bars business will be reported under a single segment in future rather than Destination and Premium and Taverns segments. This brings the reporting in line with the commercial and operating structures.
A reduction in pub formats and simpler menus has resulted in an improvement in customer satisfaction measures and social media ratings.
The brewing business continued to perform well recording volumes up 1% against tough comparatives. The company’s market position continued to strengthen and it now holds 14% of the total ale market and 24% of the premium ale market in on-trade and 25% in off-trade.
It should be remembered that the company’s brands are in demand globally and exports now account for 10% of its own brewed beer sales. The company exports 19 brands into 61 countries.
In addition to brewing, the beer business provides packaging and distribution services for a wide range of customers, distributing to around a quarter of the 46,000 on-trade outlets across the UK.
The final dividend was maintained at 4.8p resulting in a 7.5p full-year pay-out, covered 4.7 times by earnings and gives a current dividend yield of 5.9%.
