Marston’s PLC (LON: MARS) issued today the following trading update for the 16 week period to 18 January 2020 ahead of the Annual General Meeting to be held at 11:00 hrs today.
Trading
Pubs
Total managed and franchise like-for-like sales growth for the period increased 1.0%, reflecting continued growth in drinks sales offset by weaker food sales. Trading over the Christmas fortnight was strong, with like-for-like sales growth of 4.5%, compensating for more subdued trading in the first three weeks of December as a consequence of poor weather.
Costs have generally been in line with the guidance provided at the preliminary results in November. However, the recently announced 6.2% increase in the National Minimum Wage from April is higher than anticipated, and will increase second half year costs by a further c. £2-3 million.
Marston’s Beer Company
Volumes are slightly behind last year reflecting a weaker performance in the Off-Trade in December, particularly with lager sales. Excluding lager, volumes are in line with last year. Given the margin profile of the Off-Trade, despite the volume decline, earnings are in line with our expectations.
Debt reduction plans
As we have highlighted previously, it is our intention to reduce our borrowings by £200 million by 2023, with the intention to generate annual net cashflow of at least £50 million after dividends by that time.
We are focussed on achieving this target as quickly as possible, principally through the acceleration of our disposal programme. In the year to date, we have completed or exchanged on £60 million of disposals. Having originally targeted £40 million of disposal proceeds, we increased that to £70 million in November 2019 and today further increase the target to £85-90 million.
Commenting, Ralph Findlay, Marston’s plc CEO said:
“Marston’s has delivered a creditable performance in a challenging market. Trading in the key Christmas fortnight was good and has remained solid since which is encouraging. Our balanced pub portfolio enables us to perform well in the context of current market dynamics and our market-leading Beer Company has continued to increase market share in both the on and the off trade in the period. We are making excellent progress on our debt reduction strategy, well ahead of the original 2023 target.
“Looking forward, greater clarity on the political agenda should positively impact consumer confidence. Overall the economic environment for the consumer looks encouraging with low unemployment and healthy wage growth providing us with increasing confidence that the market will grow in 2020.”
