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Marston’s rejigs plans to speed debt reduction as pub sales weaken in third quarter

The publican plans to defer £70mln of the new-build investment planned for the next three years and reallocate £20-30mln into the “organic” spending on pubs that was “generating significantly higher returns”

Marston's managed and franchised pubs have grown sales just 0.5% in the past 42 weeks

Publican and brewer Marston’s plc (LON:MARS) poured considerably fewer pints in the past 16 weeks compared to this time last year and said it was accelerating its debt-reduction plans.

Like-for-like sales in its managed and franchised pubs are now up just 0.5% for the first 42 weeks of its financial year, compared to last year’s bumper long, hot summer that was also boosted by the FIFA World Cup.

READ: Marston's fizzes higher after reporting strong trading and 'progress' with debt

This was quite a slowdown compared to a 2.2% rise in LFL sales from the managed and franchised boozers in the first half of the year, which chief executive Ralph Findlay blamed partially on “relatively poor” weather.

In its Destination and Premium pubs, including the Pitcher & Piano chain, LFL growth for the 42 weeks flattened off to just 0.1%, compared to 1.2% in the first half, while its wet-led Taverns produced LFL growth of 1.1% versus 3.9% in the first half.

In the brewing arm, volumes were in line with last year, versus 4% in the first half, diluted in recent weeks by weaker lager sales in the off-trade.

Debt reduction plans

There has been “good progress” on the plan to generate more cash and reduce net debt by £200mln by 2023, which includes cutting capital investment and making £120mln of disposals.

Marston’s said it has now decided to “accelerate the timeframe” and so will defer £70mln of the new-build investment planned for the next three years and reallocate £20-30mln into the “organic capital” plans as they are “generating significantly higher returns”.

The company said the earnings impact of this capital reallocation will be “minimal” and it will generate an additional £40-£50 million of cash flow over the next three years.

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

There was no comment on press rumours that the firm is looking to sell the Pitcher & Piano chain.

Quick facts: Marston's PLC

Price: 67.65 GBX

Market: LSE
Market Cap: £446.74 m

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