-Like-for-like sales now trading above 2019 levels
-First-half £39 million operating profit
-Strategic goal to reduce net debt to £1 billion maintained
Pubs group Marston’s (MARS) said like-for-like sales returned to 97% of pre-pandemic levels in the first half to 2 April despite the Omicron variant disrupting Christmas trading.
For the last 10 weeks of the half like-for-like sales improved to 0.9% below 2019 levels and they have since improved further to slightly above pre-pandemic levels.
Better sales helped the pub estate return to a £39.9 million operating profit compared with a loss of £57.2 million last year.
However, there appeared to be some disappointment in the pace of profit recovery while the group’s joint-venture associate Carlsberg Marston’s Beer Company reported a loss of £2 million as it too was impacted by Omicron.
The shares dropped 4% to 60p and remain around 50% below their pre-pandemic trading levels.
SLOW, STEADY RECOVERY
Gregg Johnson at Shore Capital commented: ‘The period does include a material benefit from reduced VAT and with higher cost pressures, despite the improving trading backdrop we suspect consensus estimates are likely too high; although Marston’s is clearly not a 2022 story.
‘Overall, the margin reduction in the period and the slower return to profitability at CMBC will likely lead to reduction in current year estimates, especially given the squeeze on household incomes in the coming months, added Johnson.
STRATEGIC GOALS ON TRACK
Marston’s generated underlying net cash flow excluding one-offs of £13 million and said further cash inflows were anticipated in the second half.
The firm said it was on track to deliver on its medium-term financial goals of reducing net debt to £1 billion and building revenues to £1 billion over the next four years.
In terms of the £1 billion sales ambition chief executive Andrew Andrea told Shares that investors shouldn’t rule out further acquisitions if similar deals to the successful Brains acquisition became available.
Despite his near-term caution, Johnson maintained his buy recommendation saying: ‘we continue to believe that there is a long-term play on returning profitability to towards historic levels, reducing debt to below £1bn and realising value in CMBC. Delivery of which would be comfortably above the current share price.’
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