Marston’s PLC (LSE:MARS) shares frothed almost 10% after the pub company Marston’s said it expected to serve up underlying profits ahead of market expectations.
In a year-end update for the 12 month to September, the London-listed operator of more than 1,300 pubs, revealed that like-for-like sales were 1.6% ahead of a year ago, which was was down from the 2% growth reported after 41 weeks of the year.
A "step-change in profitability" during the year was attributed to margin expansion through "revenue management, labour efficiency and procurement initiatives".
Underlying EBITDA margins are expected to increase by more than 100 basis points year-on-year as the business delivers on the financial targets outlined at the capital markets day last October.
Recurring free cash flow expected to be in excess of the targeted £50 million, ahead of schedule, with year-end net debt to be five times EBITDA.
Marston's said it has a plan to accelerate capital expenditure in the new 2026 financial year, "to build on this strong momentum with a significant step up in format refurbishments over the next 12 months", having completed 31 pub format refurbishments in the past year.
Analysts at Shore Capital said that LFL sales were continuing to outpace the broader market but softer than quoted peers.
"Given the favourable summer weather for the pub trade, it is unclear at this stage whether this is a broad consumer softness or merely a hangover from the strong performance over the spring."
The shares rose to 42.55p in early trading, up 3.8p.