Programme completed, more to come
Marston's (L:MARS)'s preliminary results mark the successful completion of its threeyear transformation programme. This included a comprehensive reorganisation of the pub estate with a 25% overall reduction and a 37% increase in average profit per pub to £100k. But progress is far from over. The company is in a stable state, and able and willing to operate the levers of future growth. The steady improvement in return on capital may not be the most dramatic number compared with the double-digit earnings growth in these results, but holds the key to the assurance investors can place in the prospect of continued income growth.
Strong finals
Final results were strong, with underlying revenue up 7% to £845.5m, operating profit up 6% to £165.4m, PBT up 10% to £91.5m helped by interest reductions, and EPS up 10% to 12.9p. Leverage reduced 0.3x to 5.1x. Performance was well spread across the estate, with the two main arms Destination and Premium, and Taverns, posting like-for-like sales growth of 1.8% and 2.0%, and operating margin up 0.3% and 1.3% respectively. The brewing division, which accounts for 11% of operating profit but has an organic link to the pub estate and the culture of Marston's, grew profits 19%, boosted by the acquisition of the Thwaites beer business. Net debt of £1,245m represents 59% loan to value on the 96% freehold estate. The company reports that the current year has started well.
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