Marston’s, the brewer and pub operator, has reported that its performance in recent has been satisfactory in view of the very wet weather conditions, helped by key trading events including the Jubilee weekend, Euro 2012 and Father's Day.
In the 10 week period since 12 May, like-for-like sales increased by 1.6%.
Across its managed pubs, like-for-like sales for the 42 week period were 2.2% ahead of last year, including like-for-like food sales growth of 2.4% and like-for-like wet sales growth of 2.1%.
It said it continued to make progress across its business, with profitability in line with the group’s expectations.
The company said that operating margin was slightly above last year, and that it remained on track to complete 25 of its “high return new-build pub restaurants” in the current financial year.
The group said that across its tenanted and franchised pubs underlying trends had continued to improve with operating profit estimated to be 3.2% ahead of last year.
Marston’s said that this reflected a strong performance in the franchise estate, which now operates in around 450 pubs, and continued “stability and modest growth” in the traditional tenanted and leased estate.
It said it had continued to increase market share through its brewing division, with own-brewed beer volumes up around 2% versus last year.
The company reported that net debt and cash flow were in line with expectations.
Ralph Findlay, chief executive, said: “Our performance to date demonstrates that our focus on offering great value for money underpinned by high service levels remains attractive to our customers despite the wider economic challenges.
“In recent weeks we have achieved sales growth despite the poor weather, helped by key trading events including the Jubilee weekend, Euro 2012 and Father's Day. By the end of this financial year we will have built around 60 new pub-restaurants in three years, and we have a clear site pipeline for future development.”
Analyst reaction
Douglas Jack at Numis, said: “Despite the weather being distinctly leery, Marston's continues to trade well. Today’s 42 week IMS is in line, with minimal change in underlying trading trends in all divisions. As a result, we are holding our forecasts, which we upgraded by 5% in May (and remain above-consensus). We are retaining our Buy stance: the valuation is not strenuous and we estimate there is potentially £11.6m of PBT upgrades over three years if new build returns continue at recent levels.
“Within the turnaround estate, 450 pubs have now been converted onto Franchise Agreements. Our full year forecasts assume a 3.5% increase in tenanted profits, reflecting the improving trend as more sites convert to franchise.
“The cost outlook is improving. In Marston’s case, 2013E cost inflation can be offset by a price rise of just 1.2% in the managed estate. Against a backdrop of falling cost inflation, Marston’s self-financed double-digit earnings growth and attractive dividend yield should attract capital rotating back into the sector.”
