15th Oct 2019 09:38
(Alliance News) - Brewer and pub operator Marston's PLC said Tuesday it delivered annual revenue growth but weaker profit, after strong drinks sales offset weakness in food sales.
Shares in Marston's were 6.7% lower at 113.78 pence in London on Tuesday.
For the year ended September 28, revenue grew 3% on the year prior to GBP1.2 billion as acquisitions helped boost results, with like-for-like revenue up 0.8%. Consequently, the firm expects to reported underlying pretax profit of around GBP101 million, down slightly from the GBP104.0 million reported the year prior
Earnings before interest, taxes, depreciation & amortisation is forecast to be "broadly flat" on the GBP173.5 million reported the year before.
"Our drinks businesses have performed well, achieving further growth against an exceptionally strong 2018," Chief Executive Officer Ralph Findlay said. "Wet-led pubs have led the charge continuing their positive trajectory and food pubs have achieved modest sales growth."
Marston's said its wet-led - meaning drinks focused - Taverns unit delivered like-for-like sales growth of 1.9%, including growth of 5.4% in the last ten weeks of the year. The Destination & Premium unit, however, reported 0.1% like-for-like sales growth after strong drinks growth offset lower food sales.
"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," Findlay added.
Marston's intends to invest a further GBP2 million to GBP3 million in training and marketing in financial 2020.
"Our principal focus is on reducing our net debt by GBP200 million and creating a high quality business that is cash generative after dividends and capital expenditure," Findlay continued. "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.''
Marston's is targeting disposals of between GBP40 million and GBP70 million in the new financial year. Consequently, underlying pretax profit in financial 2020 is expected to be similar to financial 2019.
The company will deliver its full annual results on November 27.
"Marston’s trading statement confirmed that the pubs focusing more on food are underperforming compared to those where the majority of the turnover is from drink sales - mainly due to oversupply in the casual dining sector," commented Alasdair Ronald of brokers Brewin Dolphin.
"Economic uncertainty is likely to continue to impact this area as this is discretionary expenditure which can easily be curtailed."
By Ahren Lester; [email protected]
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