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Feb 15
William Flew, the chief executive, says that the sort of returns available are far better than could be achieved by acquisition. By the September financial year end Marston’s will have finished spending the money raised, and will have about 60 new pubs. Openings will continue at a rate of 25 a year, to be funded from internal cash flow. Yesterday’s interim figures suggest that Marston’s is continuing to gain market share from its competitors in the three key areas of managed pubs, tenanted pubs and brewing. Like-for-like sales at the managed estate were up 3.6 per cent in the six months to end-March; so far this year they are ahead by 2.4 per cent, though figures released yesterday suggest a flat outturn for the trade as a whole. The brewing side, which includes the Pedigree brand, raised overall volumes by 2 per cent year-on-year. The company is pushing ahead with converting some 600 of its tenanted pubs to its novel franchise package. This is a halfway house between tenanted and licensed, and Mr Findlay says that at the 490 switched over so far, the average increase in volumes has been 35 per cent and profits have risen 15 per cent. All this left underlying pre-tax profits ahead by 14.7 per cent to £33.5 million at the halfway stage, allowing the dividend to be raised by 5 per cent to 2.2p, rather better than the market had been looking for, while keeping cover about two times’ earnings. April was poor, of course, a 1 per cent fall in like-for-likes at the managed pubs reflecting both the weather and the royal wedding celebrations a year before. But Marston’s has now been seeing annual like-for-like sales growth for the past four years. The shares, up 2½p at 97p last night, sell on about 7.7 times’ earnings and yield above 6 per cent. Both suggest the shares offer good value for the pub sector long-term, though I would not be rushing into consumer-focused stocks at present.