Marston's spills some profits but pub plans on track
Pubs and brewing group Marston's has served up preliminary annual results in line with City forecasts as it made progress in improving the profitability of its pubs estate.
FTSE 250
19,450.67
17:14 18/04/24
FTSE 350
4,334.00
17:14 18/04/24
FTSE All-Share
4,290.02
16:54 18/04/24
Marston's
25.85p
16:40 18/04/24
Travel & Leisure
7,512.73
17:14 18/04/24
Although underlying group revenues bubbled 1% higher to £787.6m, profit before tax was down 3.6% to £83m, reflecting pub sales, including a portfolio disposal of 202 pubs in November 2013, and a 53-week trading period the year before.
Basic underlying earnings per share fell 2.5% to 11.7p, but, as expected, the final dividend was raised 4.9% to 4.3p making 6.5p for the year.
Due to £117.4m of mostly non-cash charges relating to disposals, onerous leases and loan note buyback, Marston's made a statutory loss after tax of £50.7m and had net debt at the period end of £1.2bn.
On the upside, average profit per pub frothed up around 10% and if adjustments are made for the £3m from 2013's extra week of trading and £9m from net disposals, analysts at Shore Capital pointed out underlying profit was ahead around 12%, highlighting progress against management's pubs strategy.
The plan is to invest in pub-restaurants nationally and sell smaller wet-led pubs, with 27 new-build pub-restaurants opened according to target and 388 smaller wet-led pubs and other assets sold to cut the estate from 2,050 pubs in 2013 to 1,689 at year end. Around 75% of pub profits are now generated by managed or franchise-style sites.
Chief executive Ralph Findlay, said: "This year we have made good progress in transforming the quality of our pub estate through the continuation of our new-build development plans and the disposal of weaker pubs."
He added that the brewing business was benefiting from Marston's category leadership in premium ale and new product development, with a particularly strong performance from Hobgoblin over Halloween helping towards continued growth in revenue and operating profits.
Current trading is solid as like-for-like sales in destination and premium are ahead by 2.1% against tough comparatives of more than 3%, with taverns also ahead by roughly 2%. Findlay added: "There are some signs of modest economic improvement, with the emergence of real wage growth and resilience within the economic regions outside London.
"Looking forward, we will continue with our expansion strategy to invest in at least 25 new-build pubs each year. We also remain on track to dispose of the residual 200 pubs targeted for sale from our taverns estate over the next 12 months to create the desired structure for our business for the future."