Pub group Marston’s will reduce new-build investment to around £25m per annum from 2020 onwards as it looks to trim its net debts.
The company is aiming to slash £200m off its £1.2 billion debt pile over the next four years, prompting a recent review of its future capital allocation plans.
In recent years it has opened more than 25 sites annually but that is poised to slow. But where it does spend, it said investment would be weighted towards pubs with accommodation, where it sees the strongest returns.
It also plans to get rid of between £80m and £90m worth of certain non-core assets between and 2020-23.
Marston’s said that although new-build investment is being scaled back, new-build pubs and accommodation deliver strong returns and will continue to contribute to growth in group earnings. In addition, the reduced level of estate expansion will facilitate increased focus on generating like-for-like profit growth from the core pub estate.
A trading update for the four months to 19 January issued this week revealed that total like-for-like sales were up 1.4%, including a strong performance over Christmas when the business grew nearly 6%.
CEO Ralph Findlay stated: “We operate in increasingly uncertain times from a political and macro-economic perspective and as such, we remain cautious about the potential consumer outlook until there is more clarity.
“However, we are confident of delivering further profitable growth this year, while focusing on our strategic priorities of generating cash and delivering our stated £0.2bn debt reduction target between 2020 and 2023. In addition, we are committed to maintaining the dividend at the current level during this period and believe that the combination of these actions will drive long term value for shareholders.”