Brewer and pub operator Marston's Plc (MARS.L) Friday stated that trading for the 16-week period ended January 23 has been encouraging and in line with its expectations, despite poor weather in January.
Marston's said it has continued to make good progress in each of its trading divisions. During the Christmas and New Year festive period, the company continued to experience the positive trading momentum it reported in its Preliminary Results Announcement on December 3, 2009.
For the 16-week period, the company's managed pubs division, Marston's Inns and Taverns, reported like-for-like sales growth of 1.5% compared with last year. Marston's attributed this growth to operating margins, which were slightly ahead of last year and in line with the company's expectations, driven by tight cost control and reduced cost pressures.
Marston's also stated that trading was robust over the Christmas and New Year period. In the five weeks ended January 2, like-for-like sales rose 2.9%, including food sales growth of 4.4% and drinks sales growth of 1.9%.
However, January trading has been weaker, with like-for-like sales declining 5.9% due to two weeks of poor weather. Sales trends have returned to the levels achieved before the weather disruption, Marston's noted.
Further, Marston's tenanted and leased pubs division, Marston's Pub Company, reported a 4.9% year-over-year decline in its like-for-like profit for the 16-week period. Marston's Pub had reported a 7% slide in its like-for-like profit in the financial year ended October 3, 2009. Operating profit per pub is down 1.9% reflecting disposals.
Marston's also stated that around 80% of the pubs are let on substantive medium to long-term agreements, and profit from these pubs is in line with last year. A further 7% of the estate is let on either new Retail or Tracker Agreements. The performance of these pubs also is consistent with the company's targets.
In addition, Marston's said own-brewed beer volumes in Marston's Beer Company were in line with last year, which compares favourably to a UK ale market that was down around 6%. Premium cask ale volumes rose 1% and premium bottled ale volumes increased 16% in the period, and the company has leading market shares in both of these market segments.
According to Marston's, its pub development plans are on track. The company will open 15 new food-led managed pubs in this financial year. The company has opened 4 to date in Aylesbury, Caterham, Daventry and Ashbourne, and is on site in 8 locations. Marston's will commence work on a further 3 pubs by Easter. The pub developments are part of the company's plan to open 60 new pubs of this type over a three-year period. Marston's also targets EBITDA multiple of 6.7 times, in line with the guidance given at the time of its rights issue.
Marston's also stated that net debt and cash flow are in line with its expectations. The company remains on its strategy to reduce net debt to EBITDA ratio to around 5 times over the course of the next few years.
Going ahead, Marston's said its outlook for the UK economy remains uncertain. The company is yet to see the consumer confidence impact of the recently implemented and proposed taxation increases.
Marston's is conducting its Annual General Meeting at 12 noon today.
MARS.L is trading at 89.70 pence on the LSE, down 0.30 pence or 0.33%, on a volume of 221,049 shares.
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