Marston's reports positive first half as trading normalises

(Sharecast News) - Pub operator Marston's reported positive growth in its underlying first-half results on Tuesday, despite a tougher macroeconomic environment. The London-listed company, which operates 1,440 pubs, reported total revenue of £407m, up from £369.7m year-on-year.

Pub operating profit increased to £43.1m in the 26 weeks ended 1 April, from £39.9m a year earlier, with Marston's putting the growth down to a 10.7% increase in like-for-like sales compared to the same period last year, and a 17.9% increase compared to the 2020 financial year.

The firm's drink sales continued to perform well, with food sales showing encouraging results.

Marston's also saw an improved share of profits from associates, reporting £2.2m compared to a loss of £2m in the same period last year.

The company reported positive cash generation, debt reduction, and continued growth in net asset value (NAV) per share.

Its operating cash inflow totalled £69.9m, compared to £30.2m in the first half of last year, and it swung to a net cash inflow of £11.5m from an £8.9m outflow.

Marston's continued its debt reduction strategy, with net debt excluding IFRS 16 lease liabilities narrowing by £12.1m to £1.2bn.

The firm said it generated £24.3m from non-core strategic disposals, exceeding net book value by 39%.

Marston's was expecting further disposals totaling £50m to £60m in the 2023 financial year, while the company also secured an amendment and extension of its banking facilities, totaling £340m, comprising a £300m revolving credit facility and a £40 million private placement.

In terms of its current trading and the outlook, Marston's said like-for-like sales in the last six weeks showed a 7.9% increase compared to last year.

The key Easter and first May bank holiday dates were particularly strong, the board said.

It added that it was managing inflationary challenges by securing energy costs and offsetting other costs through efficiencies and pricing strategies.

Trading patterns were normalising, indicating encouraging consumer resilience.

"The strategy which we outlined 18 months ago is progressing well and generating positive results, which is pleasing," said chief executive officer Andrew Andrea.

"Our first-half performance clearly demonstrates that consumers remain as keen as ever to celebrate - and socialise within - the 'Great British pub'.

"The macro environment is becoming increasingly stable and recent evidence suggests that both the cost outlook, and consumer confidence, are steadily improving."

Andrea said the actions the company was taking were building a "demonstrably better business", adding that Marston's predominantly community pub estate was benefitting from changing consumer lifestyles.

"We continue to deliver upon our clear strategic objective to reduce debt and progress our path to profitability, albeit the seasonality of our trading profile means that the majority of the group's profit is characteristically second-half weighted.

"We have invested ahead in the first half, to capitalise on the benefits of this in the second, and remain on track to meet our operating profit, cash generation and debt reduction targets for the year.

"We look forward to delivering further positive progress as the year unfolds and remain confident that we have the strategy and the team in place to do so, maximising the opportunities open to us in the future and delivering shareholder value."

At 1005 BST, shares in Marston's were down 0.27% at 37.05p.

Reporting by Josh White for Sharecast.com.