- Full-year sales up 4.8%
- Full-year profit in line with consensus
- Year-end net debt to fall by £300 million
Pubs group Marston’s (MARS) said strong trading continued into its final quarter resulting in full-year like-for-like sales up 4.8%, ahead of the broader hospitality market, driven by resilient demand for its food and drink.
The group noted a ‘material’ circa £300 million reduction in year-end net debt to £885 million following the disposal of its 40% share in CMBC (Carlsberg Marston’s Beer Company) as well as improved profitability.
Investors welcomed continued momentum in the business with the shares trading up 0.6p or 1.4% to 43.5p, taking gains for the year to 28% compared with a 6.5% advance for the FTSE All-Share index.
WHAT DID THE COMPANY SAY?
CEO Justine Platt commented: ‘This performance, combined with our recent disposal of CMBC puts Marston’s in a strong position to drive value for our shareholders as a focused pub business.
‘We look forward to sharing more about the Marston’s growth opportunity at our investor day next week.’
Total retail sales for the 52 weeks to 28 September increased 5.8% from the prior year, slightly ahead of consensus market expectations. Management said strong trading and cost efficiencies gave it confidence in delivering the £40.5 million of pre-tax profit expected by analysts.
EXPERT VIEWS
Shore Capital’s leisure analyst Greg Johnson noted the fourth quarter trading strength meant the full-year outturn in like-for-like sales growth was ahead of his 4.5% assumption.
Johnson sees a ‘significant’ step-up in cash generation and anticipates free cash flow of circa £40 million to £50 million.
‘We see increasingly balance sheet flexibility and optionality, which should be further supported by a potential upward revision of the year-end property valuation’, added Johnson.
Investors will be hoping for more detail on plans to increase shareholder value at the Capital Markets Day on 16 October.
Russ Mould, investment director at AJ Bell, said: ‘Marston’s has streamlined its estate – selling off a swathe of pubs back in May – and if the company can continue to chip away at a still sizeable debt pile it may one day be able to return to the dividend list after a hiatus which dates back to pre-pandemic days.’
Improved profitability and deleveraging trends are continuing themes in hospitality, with JD Wetherspoon (JDW) having reinstated its dividend for the first time since the pandemic.
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Martin Gamble) and the editor (James Crux) own shares in AJ Bell.
