Marston's reports underlying full-year growth

Pub operator Marston's reported total underlying revenue of £872.3m in its preliminary results on Tuesday, up from £799.6m year-on-year.

The company attributed the growth to its continued progress towards its ‘Back to a Billion’ sales and net debt reduction targets, as like-for-like sales saw a 10.1% increase compared to the prior year.

Both drink and food sales contributed to the positive revenue results, with the underlying pub operating profit for the 52 weeks ended 30 September amounted to £124.8m, making for an 8% increase year-on-year.

Despite a high inflation environment, Marston's said it was able to maintain its underlying operating margin effectively flat at 14.3%.

The firm reported improved results in its share of CMBC's profits, with £9.9m in profits for the 2023 financial year, compared to £3.3m in 2022.

Additionally, it received dividends totaling £21.6m.

It demonstrated strong cash generation and debt reduction, with the operating cash inflow for the year amounting to £141.2m, increasing from £134m in 2022.

The net cash inflow for the period stood at £34.4m, compared to £26.2 million in the prior year.

Marston’s continued its strategic efforts to reduce debt, with net debt excluding IFRS 16 lease liabilities narrowing by £31m to reach £1.185bn.

It also generated £54.5m from non-core strategic disposals, surpassing the net book value of those assets.

In terms of financing, Marston's successfully secured an amendment and extension of its banking facilities, totaling £340m.

That included £300m in revolving credit facilities and £40m in private placement.

The evolution of the company’s pub portfolio was marked by market outperformance, with its predominantly freehold pub estate and limited exposure to city centres continuing to benefit from consumer lifestyle changes.

Its board said a simplified pub estate evolution strategy yielded positive results, with food and drink spend per head up 8.1% and 8.6%, respectively, and a gross margin increase of 0.6%.

Marston's also reported a successful trial of a franchise-style model in food-led managed pubs, with sales growth significantly surpassing that of the broader food business.

The company completed 41 capital schemes and invested £4m in gardens, with £50m to £55m earmarked for capital expenditure in the 2024 financial year.

Looking ahead, Marston's reported positive current trading, with like-for-like sales since the year-end up 7.4% compared to the prior year.

Christmas bookings were tracking well and ahead of last year.

The company said it was proactively managing inflationary challenges, securing energy costs and implementing pricing strategies and efficiencies.

In terms of its long-term vision, Marston's said it aimed to improve business resilience by targeting a margin improvement of at least 200 basis points in the medium term.

“We have continued to make positive progress on our key goals and strategic initiatives,” said chair William Rucker.

“The consumer has remained resilient despite the macro backdrop and Marston's continues to trade well, achieving market outperformance.

“We anticipate an improving outlook in which cost headwinds are largely abating and like-for-like sales are up over 7% since the year end.”

Rucker said that, together with the actions taken this year to drive further efficiencies, left the board confident that Marston's was well-placed to continue to outperform and grow revenue, margin and profitability.

“We look forward to welcoming Justin Platt who joins the group as CEO in January.

“The business is in good shape and well-positioned to take advantage of the future opportunities open to us to create value for our shareholders under his stewardship.”

At 1040 GMT, shares in Marston’s were down 1.41% at 30.51p.

Reporting by Josh White for Sharecast.com.