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Marston’s in modest growth mode as it tweaks plans to cut £200m debt pile

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Marston’s this morning said its business had achieved “modest growth” during the vast part of the last year, as it set out new plans to reduce its debt pile.

The 1,500-strong pub chain revealed like-for-like managed and franchised pub sales increased by 0.5% in the 42 weeks to 20 July 2019.

In Destination and Premium, like-for-like sales for the same period were 0.1% ahead of last year and in Taverns, the growth was 1.1%.

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The company said the growth came against a stronger summer period last year, which included the World Cup and an unusually hot summer.

It continues to remain disciplined in terms of pricing, discounting and promotion, adding that operating margin remains in line with its expectations.

Back in January, Marston’s said it was targeting a reduction in net debt by £200m between 2020 and 2023 through reduced capital expenditure, £120m of disposals and a decrease in interest and pension costs.

Following a further review of its plans, the chain has decided to accelerate the timeframe within which the debt reduction target is achieved.

As a consequence, it is proposing to defer £70m of the new-build investment planned for the next three years and reallocate £20m to £30m of funds into its organic capital plans, which are generating significantly higher returns.

The company said the earnings impact of this capital reallocation will be minimal and generate an additional £40m to £50m of cash flow over the next three years.

Ralph Findlay, CEO of Marston’s, said: “We have achieved modest growth during the 42 weeks to date continuing the long term positive LFL sales trend despite May and June being hampered by relatively poor weather.

“We have a high-quality, balanced pub estate and a highly disciplined approach to preserving margin, together with a leading beer business which continues to perform well leveraging our outstanding brand portfolio and increasing our market share.”

Commenting on the new debt reduction targets, Mr Findlay said Marston’s had decided to defer its remaining new-build plans and reallocated £20m to £30m of the £70m new-build capex over the next three years to drive higher returns from its existing estate.

“We believe that this focus will further enhance our returns from our existing pub business and reduce our debt at an even greater pace,” he explained.

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Andrew Seymour

The author Andrew Seymour

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