Marston’s plc (LON:MARS) has scaled back its long-term expansion plans as it looks to slash its debts amid an “increasingly uncertain” economic backdrop.
The pubs group is cutting its new-build investment to £25mln a year from 2020, while it will also look to sell off between £80-90mln of “non-core assets” over the next few years.
READ: Marston’s expecting significant pick-up in food-led pubs in 2019
It hopes that these measures will allow it to shave an extra £200mln off its £1.2bn debt pile by 2023.
Although a scaled-back expansion plan doesn’t scream confidence, investors can at least take some heart from management’s commitment to maintaining the dividend.
“We operate in increasingly uncertain times from a political and macro-economic perspective and, as such, we remain cautious about the potential consumer outlook until there is more clarity,” said chief executive Ralph Findley.
“However, we are confident of delivering further profitable growth this year, whilst focussing on our strategic priorities of generating cash and delivering our stated £0.2bn debt reduction target between 2020 and 2023.”
He added: “We are committed to maintaining the dividend at the current level during this period and believe that the combination of these actions will drive long term value for shareholders.”
Solid Christmas trading
In the same update, Marston’s said it enjoyed a “strong” performance over the Christmas fortnight, with like-for-like sales climbing 5.7% year-on-year. For the 16 weeks ended 19 January, same-pub sales edged 1.4% higher.
The group’s ‘wet-led’ Taverns division saw the standout performer, delivering like-for-like growth of 8.1% over Christmas and 3.2% for the quarter as a whole. Total volumes in the brewing arm – Beer Company – were up 3.5%.
Marston’s more food-focused Destination and Premium division saw same-pub sales rise 4.5% over the two-week festive period but only 0.5% over the 16 weeks.
“Marston's continues to perform well and this is a creditable performance in a challenging market,” said CEO Findlay.
“Taverns and the Beer Company both delivered strong trading over the core festive period in particular, continuing the trajectory of recent months, and our managed food-led pubs also returned to growth.”
Shares fell 3.1% to 99.7p on Wednesday morning.