- 1H like-for-like sales up 10.7%
- Continued progress in debt reduction
- Strong start to 2H trading
Pub group Marston’s (MARS) continued its post pandemic recovery with first half underlying sales up 10.7% compared with last year and operating profit up 8% to £43.4 million.
Positive trading has continued into the second half with like-for-like sales up 7.9% in the last six weeks including ‘strong’ Easter and bank holiday turnover.
Despite spending heavily on refurbishments in the half to maximise the benefit in the second half, the company generated net cash of £11.5 million compared with an £8.9 million outflow in 2022.
Sales in the six months to 1 April increased 10% to £407 million and the business made a pre-tax loss of £3.6 million compared with a loss of £7.5 million last year.
The seasonal nature of the business means most of the annual profit is made in the second half of the financial year. The shares fell 7% to 34.6p, leaving them 45% lower over the last year.
NET DEBT REDUCTION HIGHER THAN EXPECTED
The company made good progress reducing its net debt, which fell £12.1 million to £1.2 billion. Marston’s is aiming to reduce net borrowings to below £1 billion by 2026.
Chief executive Andrew Andrea told Shares that reducing debts is a proven method of increasing value for shareholders as they receive a greater proportion of profit as debt falls. This phenomenon is sometimes called equity transfer.
Non-core disposals raised £24.3 million, which were achieved at a value 39% ahead of book value. Marston’s expects to generate £50 million to £60 million in non-strategic disposals for the full year.
Peel Hunt analysts noted that higher disposals at high exit multiples should result in ‘minimal’ profit dilution. The broker also increased its debt reduction estimate.
‘This year, we forecast £64 million of net debt reduction, equivalent to 30% of market capitalisation. EBITDA (earnings before interest, tax, depreciation, and amortisation) is falling faster than expected.’
LEARN MORE ABOUT MARSTON’S
