Leading analyst Alexander Mees, from JP Morgan, says there is every reason to expect a ‘normal’ year in FY19, with the recovery in Destination & Premium and a flatter performance by Taverns.

The note reads: “FY18 was an unusual year for Marston’s. The heady summer days of sunshine and football was a boon for wet-led Taverns, which achieved 3.8% growth in LFL sales.

“The very same factors had the reverse effect on food-led Destination & Premium pubs, which reported (1.2)% LFLs, slightly better than our (1.3)% forecast. The Beer Company had a strong year, with volumes up 47%. In the final reckoning, Marston’s expects adjusted PBT of £104 million, up 4% y/y.

“We have had to trim our PBT estimate by 3% to get there, although this comes entirely through higher forecast financing costs and we have in fact increased our adjusted operating profit forecast by just under 1%.

“At this early stage, there is every reason to expect a more ‘normal’ year in FY19 with a recovery in Destination & Premium and a flatter performance by Taverns. Marston’s dividend yield, which we see as sustainable, is nearly 8% and, in our opinion, that is reason enough to stay OW.

In terms of what to expect in the prelims in November, Mees says the operating margin is expected to be 50bps down y/y in this division, with JP Morgan forecasting net debt to have risen to £1.36 billion with financing costs of £78 million. We expect a 0.1p increase in the dividend to 7.8p.

“The British autumn weather has so far behaved itself and Marston’s reports ‘improving momentum’ in its food-led pubs, albeit off a reasonably undemanding comp,” added the note.

“We see positive growth in profits in FY19 and forecast adjusted PBT of £109 million, up 5% y/y, though 4% lower than our previous forecast. Cost pressures remain, but Marston’s is resisting discounting and we expect margins to be protected.”