viewMarston’s PLC

Marston’s to sell an extra £30mln in assets to boost debt reduction

In 2019, group turnover was up 3% to £1.2bn, with underlying earnings (EBITDA) broadly flat year-on-year and underlying profit before tax of around £101mln

Marston’s plc - Marston’s to sell an extra £30mln in assets to boost debt reduction
There was higher demand in drinks rather than food

Marston’s plc (LON:MARS) said it plans to sell more properties in order to cut debt, as it finished a strong year of trading for wet-led boozers but with food-led pubs flat.

The publican and brewer, which has around £1.4bn in net debt, upped its disposal guidance from £40mln to £70mln in 2020 as it looks to reduce the pile by £200mln over the next four years, although broker Peel Hunt forecasts only £55mln for both 2020 and 2021 mostly due to lower capital expenditure.  

READ: Marston’s rejigs plans to speed debt reduction as pub sales weaken in third quarter

Underlying profit before tax for 2020 is expected to be flat year-on-year, reflecting growth in underlying operating profits offset by increased disposal activity, additional pub investment and higher interest charges.

In the year ended 28 September, group turnover was up 3% to £1.2bn, with underlying earnings (EBITDA) broadly flat and underlying profit before tax of around £101mln.

The wet-led Taverns segment grew by 1.9% in like-for-like (LFL) sales, while the LFL food-led Destination and Premium was up only 0.1%, reflecting higher demand in drinks rather than food.

“Our principal focus is on reducing our net debt by £200mln and creating a high-quality business that is cash generative after dividends and capital expenditure,” said chief executive Ralph Findlay.

“We are making encouraging progress and have decided to increase the pace of our disposal programme this year to accelerate the achievement of this target.”

Peel Hunt revised their 2020 and 2021 forecasts by 4%, bringing it in line with consensus, although it expects EBITDA growth, debt reduction and dividends to drive equity value up 35% over the next two years.

"The shares should weaken as a result of these forecasts adjustments, bringing, in our view, an attractive opportunity to buy into the company’s dividend and debt reduction," the broker said in a note.

Shares plunged 9% to 110.64p in the early morning.

--Adds broker's comment--

Quick facts: Marston’s PLC

Price: 63.75 GBX

Market: AIM
Market Cap: £420.98 m

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