Marston’s PLC has today issued the following Trading Update for the year ended 28 September 2019, showing group turnover was up 3% to £1.2bn.
The firm anticipates reporting EBITDA broadly flat year on year and underlying profit before tax of around £101m, with higher operating profits in its Taverns and Beer businesses offset by lower earnings in Destination and Premium.
Total pub sales increased by 3%, including like-for-like sales growth of 0.8% and the contribution from its pub expansion programme. In the most recent 10 weeks, like-for-like sales were up 1.9%.
Taverns - against a strong comparative year our wet-led Taverns pubs performed strongly with managed and franchised like-for-like sales growth of 1.9% including growth of 5.4% in the last 10 weeks.
Destination and Premium - like-for-like sales were 0.1% ahead of last year, reflecting stronger drink sales offset by lower food sales. Premium Pubs and Bars performed well with growth in Pitcher & Piano, Revere Bar and Revere Country. Operating margins will be below last year principally reflecting increased margin investment and higher labour costs as a percentage of sales.
Marston’s Beer Company - total volumes were up 1% for the period, building on an outstanding year for brewing last year.
Net debt for the year ended in line with our expectations at £1,399m. As highlighted at the Interims, Marston’s increased stock levels as part of its Brexit-preparedness planning. It is confident that the group is as prepared as it can be for a potential no-deal Brexit on 31st October and the group has implemented its contingency plans to ensure it can best service its customers over the key Christmas trading period.
2020 Outlook - in 2020, as previously highlighted, the 53rd trading week will offset the impact of the step-up in securitised interest (which reverses by c £3m in 2021). Following a review of its operational plans for 2020, the firm is proposing to invest an additional £2-3m in pub training, localised pub team incentive initiatives and digital marketing investment.
In addition, Marston’s is seeking to accelerate its stated debt reduction target of £200m by 2023. To that end we are increasing our disposals guidance from £40m to £70m for the current financial year.
Marston’s therefore expects underlying profit before tax in 2020 to be at a similar level to 2019, reflecting growth in underlying operating profits offset by increased disposal activity, additional pub investment and higher interest charges.
Ralph Findlay, Chief Executive Officer, said, ‘Our drinks businesses have performed well, achieving further growth against an exceptionally strong 2018. Wet-led pubs have led the charge continuing their positive trajectory and food pubs have achieved modest sales growth.
“Operationally, we remain focused on further improving our proposition and plan to make additional investment in both our pub teams and digital marketing in the forthcoming year.
“Our principal focus is on reducing our net debt by £200 million and creating a high quality business that is cash generative after dividends and capital expenditure. We are making encouraging progress and have decided to increase the pace of our disposal programme this year to accelerate the achievement of this target.’’