Reducing net debt by £200m is Marston’s ‘principal focus’

15-Oct-2019 - Last updated on 15-Oct-2019 at 11:43 GMT

Financial focus: more disposals have been identified as a way to reduce net debt

Alongside a sixth consecutive increase in annual like-for-like sales, Marston’s revealed net debt of £1.39bn.

In a trading update for the year ending 28 September 2019, pub operator and brewer Marston’s revealed that group turnover increased by 3% to £1.2bn over the past year, alongside anticipated underlying profit before tax of around £101m.

What’s more, the group revealed that while its net debt ended the period at £1.39bn, reducing it to the tune of £200m was the company’s ‘principal focus’.

According to its latest statement, Marston’s plans to accelerate its debt reduction target of £200m by 2023 by increasing disposal values from £40m to £70m for the current financial year.

This follows news reported by The Morning Advertiser that the Wolverhampton-based operator is looking to sell 150 of its pubs for around £45m, with Red Oak Taverns, Admiral Taverns and NewRiver initially linked to the package.

Marston’s spent £74.4m in the 26 weeks ending 30 March 2019, including £27.1m on new pubs and bars, according to figures reported by The Morning Advertiser, as the company also acquired 15 former Mitchells & Butlers pubs in September 2018, which have been subject to around £4m investment since.

Pub sales

According to its latest figures, total pub sales across Marston’s estate of 1,500 pubs increased by 3%, including a 0.8% like-for-like sales boost. What’s more, in the last 10 weeks, the brewer and operator saw like-for-likes increase 1.9% year-on-year overall.

This growth in like-for-likes represents the group’s sixth consecutive annual increase after it announced that like-for-likes across its estate of pubs grew by 0.6% for the 52 weeks ending 29 September 2018, off the back of the summer’s heatwave and World Cup.

It also revealed that higher operating profits in its taverns and beer businesses were offset by lower earning across its premium and destination sites.

The group’s premium and destination pubs – including Pitcher & Piano, Revere Bar and Revere Country – saw a 0.1% increase in like-for-like sales, while its wet-led taverns pubs recorded managed and franchised like-for-like sales growth of 1.9% – including a 5.4% spike in the last 10 weeks.

Wet-led pubs leading the charge

The brewer and operator’s year-end trading update also revealed that total volumes at Marston’s Beer Company increased by 1% year-on-year.

What’s more, Marston’s recently unveiled a facelift for its portfolio of award-winning Hobgoblin beers – the first redesign in the brand’s 31-year history – to appeal to younger drinkers.

Following a review of operations, Marston’s also plans to invest between £2m and £3m in pub training, localised pub team incentive initiatives and digital marketing investment.

“Our drinks businesses have performed well, achieving further growth against an exceptionally strong 2018,” Marston’s chief executive Ralph Findlay said.

“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 £200m 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.”