Pub group Marston’s scales back expansion plans as it looks to slash debts
Marston's today said it will limit its expansion plans in a bid to reduce its £1.4bn debt pile amid continued economic uncertainty.
In a trading update Marston’s said like-for-like sales rose 1.4 per cent in the 16-week period to 19 January, boosted by strong trading over the Christmas fortnight.
But the brewery and pub chain said it will launch a cost-cutting plan in a bid to reduce its net debt by £0.2bn to £1.2bn by 2023.
Martson’s said it will reduce new-build investment to roughly £25m per year from 2020 onwards and dispose of assets worth between £80m and £90m to help slash the debt.
Shares in Marston’s fell more than three per cent following the update.
Chief executive Ralph Findlay said: “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, whilst focussing on our strategic priorities of generating cash and delivering our stated £0.2bn debt reduction target between 2020 and 2023.”
Marston's enjoyed a strong festive trading period, with its taverns division posting growth of 8.1 per cent over the Christmas fortnight.
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The company said it is committed to maintaining the dividend at its current level during the period.
Paul Hickman, analyst at Edison Investment Research, said: “This is a company that prioritises its dividend, and although these cash-saving measures will tend to limit future growth, they should serve to protect the consistency of the pay-out for which Marston’s has a well-deserved reputation.”