Marston’s is deferring a £70m new-build programme, and reallocating £20-30 million of funds into the pub company’s organic capital plans.

The company said this would generate “significantly higher returns”, accelerate its debt reduction targets, and improve cashflow.

The announcement comes as the pub operator and brewer reported modest growth across the group, in the 42 weeks to 20 June 2019.

Like-for-like managed and franchised pub sales increased by 0.5%. In Destination and Premium, like-for-like sales were 0.1% ahead of last year. In Taverns, like-for-like sales for the 42-week period were 1.1% up.

Marston’s said its Beer Company volumes are in line with last year, and continue to outperform the market, with volume performance over the last 16 weeks principally reflecting weaker lager sales in the off-trade.

A target to reduce net debt by £200m in 2020-2023 through reduced capital expenditure, £120m of disposals and a reduction in interest and pension costs is making “good progress”.

The deferment of the £70m new-build programme will allow Marston’s to accelerate this debt reduction.

According to the trading update, the earnings impact of this reallocation will be “minimal” and will generate an additional £40-£50m of cash flow over the next three years.

Ralph Findlay, chief executive, said: “We have achieved modest growth during the 42 weeks to date continuing the long term positive LFL sales trend despite May and June being hampered by relatively poor weather. We have a high-quality, balanced pub estate and a highly disciplined approach to preserving margin, together with a leading beer business which continues to perform well leveraging our outstanding brand portfolio and increasing our market share.

“Having made good progress with our cash generation and debt reduction plans, we have subsequently decided to accelerate our efforts in this context and defer our remaining new-build plans and reallocate £20-30 million of the £70 million new-build capex over the next three years to drive higher returns from our existing estate. We believe that this focus will further enhance our returns from our existing pub business and reduce our debt at an even greater pace.”

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