The weather has been a consistent problem for pub companies this year and Marston's (MARS) was no exception. Underlying operating profits fell by 1 per cent to £66.6m in the half year to the end of March as its clientele stayed at home to hide from the cold. However, in the past six weeks like-for-like sales have risen 6 per cent, with the company continuing to ride the change in public taste away from mass market beer towards locally brewed artisan ales.
The premium niche is proving to be the most successful of Marston's business divisions, which also includes brewing, leased pubs and tavern-type restaurants. Sales from the 301 premium and destination pubs, including the Pitcher & Piano and Revere chains, increased by 8.3 per cent to £154m, with segmental profits rising by almost 10 per cent to £24.2m. Nine pubs were opened during the half, and another 11 are expected to open during the second half, accounting for most of the £120m of capital expenditure for the financial year. However, the investment should pay off with the openings forecast to generate £12m of embedded profit.
Management also took steps to improve its capital position by refinancing £101m of debt on better terms for a longer period. The refinancing is backed by Marston's freeholds, which revert back to the company at the end of the term, thus reducing its reliance on conventional bank debt.
Broker Numis Securities forecasts full-year pre-tax profits of £93.5m and EPS of 12.9p, rising to £100m and 13.9p, the year after (from £87.8m and 12.2p in 2012).
MARSTON'S (MARS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 149p | MARKET VALUE: | £851m | |
| TOUCH: | 149-149.5p | 12-MONTH HIGH: | 152p | LOW: 93.5p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | na | |
| NET ASSET VALUE: | 133p* | NET DEBT: | 157% | |
| Half-year to 30 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 342 | 25.2 | 4.10 | 2.20 |
| 2013 | 358 | 23.9 | 3.40 | 2.30 |
| % change | +5 | -5 | -17 | +5 |
Ex-div: 29 May Payment: 1 Jul *Includes intangible assets of £247m, or 43p a share | ||||
