A halving of exceptional expenses helped the massive jump in reported profit at pub and brewer Marston's (MARS), which continues to expand its premium and tavern businesses. A revaluation of its estate in the 2015 financial year contributed to higher costs that year, so without that this time around, operating costs dropped markedly. The underlying pre-tax profit growth of 7 per cent was respectable but fell below the 10 per cent rate in the prior year, due to slower underlying profit growth in its destination and premium division and its taverns business.
Still, the return on capital employed edged up as pub-restaurants were opened and non-core pubs sold. Chief executive Ralph Findlay also believes his company is better positioned to deal with pressures facing the sector. The government's business rates review kicks in next year but Mr Findlay said the lower number of Marston's sites in London and city centres generally would mean the cost of the increase would be less for him than many rivals. He also believes he's better placed to deal with the spectre of input cost inflation thanks to contracts with most suppliers extending into 2018.
Analysts at Numis expect pre-tax profit of £101m for the year to September 2017, leading to EPS of 14.2p compared with £98m and 13.8p in FY2016.
| MARSTON'S (MARS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 136p | MARKET VALUE: | £785m | |
| TOUCH: | 136-136.2p | 12-MONTH HIGH: | 177p | LOW: 127p |
| DIVIDEND YIELD: | 5.4% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 131p* | NET DEBT: | 169% | |
| Year to 1 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 720 | -135 | -19.4 | 6.1 |
| 2013 | 783 | 68 | 10.0 | 6.4 |
| 2014 | 815 | -59 | -8.9 | 6.7 |
| 2015 | 879 | 31 | 4.1 | 7.0 |
| 2016 | 937 | 81 | 12.7 | 7.3 |
| % change | +7 | +158 | +210 | +4 |
Ex-div: 15 Dec Payment: 30 Jan *Includes intangible assets of £265m, or 46p a share | ||||
