The company have basically gambled with their egos on increasing the wet side......which of course provides the lowest margins and profits within the business - great investment (see previous posts)
Have waited until now to post to see the more considered market view (down 9% - wiping out all the recent gains in the run up to these figures)
The company has held (not increased divi).....has cut back on capex next year and despite saying the "right things" the market is quite rightly not impressed.
As stated by previous posters today, the divi is the reason to stay and yet the holding of the interim and capex reduction are definite warning signs that there is concern.....no rush for capital gains here!
If it is a BBB rated bond proxy you are after then possibly ok, if it is recovery, don't hold your breath.
Results mixed but overall OK. Management reducing capex in light of market risk is a positive - as in, they're on the ball and doing what is necessary to safeguard the business going forward.
This is effectively part REIT and part brewery and as mentioned in the results this is a well-diversified business within the context of the sector MARS operates within. Buy for the very generous and solid dividend but don't expect much in the way of capital growth.
The results have had a pretty grim impact on on the sp this morning, being down 7.5% as I write.
The dividend has been maintained and the yield is around 7.3% and the PE around 7.2. The question is whether we are in a death spiral value trap or whether the market has got this one seriously wrong. Any views?
From my perspective the business can be seasonally affected as with all brewers but the restaurant business should protect against this. Also, the beers are fundamentally top rate products and are not about to disappear any time soon so I cannot see the business going down the pan.
Is it time to pitch in or to beware? Personally, my money is going into VOD at the moment.
Hi OH. The dividend is the only reason to hold here, so when it passes the price does generally tend to drift downwards to a lower level than simply the ex-div price. We are headed into the 90s in June (I guess).
[I should also have mentioned the mammoth debt here, though this is a necessary to run the business. Also Peel Hunt have also reiterated their 'buy' recommendation and 140 target].
They seem to be coming out with all the right noises, but I can see nothing that will give a boost to the dismal share price performance over the medium term. There are just too many mediocre pub restaurant and restaurant chains in the market place, all falling over each other to grab a piece of market share with desperate offers that erode margin. This is the market that Marstons operate in and it is tough.Glad to see a reduction in proposed capital expenditure at this time and I hope they are keeping a very close eye on the ROC of any new investment.
I may be being harsh, but it all seems rather too cosy and comfortable to me. Very well paid Directors, trotting out the same old lines, but no points of difference to make Marstons a stand out company.
I continue to hold for the divi for the time being, but can see little or no improvement in the sp, over the medium term.
Essentially we are seeing growth by the acquisition of brewing assets. As H.E. says this is inevitably leading to dilution. As long as the acquisitions are made at a reasonable price, and continue to prove profitable, the company remains a decent, reliable dividend payer. However capital gains will stay off the table. This morning is seeing a fall in price as a result of the top line of these results. However we are not yet at a buying level. The should come after we go ex-div later this month.
At the moment we have:
PER = 7
PtB = 0.76 (though this is a VERY unreliable figure)
PEG = 0.46 (moving to -0.74)
Yield = c7% (covered x1.8)
Results look a bit of a mixed bag, revenue well up due to acquisitions and investment, profit up 8% but underlying EPS flat at 4.8p. Thats the effect of dilution due to share placing at time of CW acquisition. That is one of the concerns with MARS that the costs of acquisitions erodes the overall returns through added debt or dilution.
Outlook - expect to deliver growth in both revenue and underlying profit before tax in 2018 despite the impact of weather on our first-half results. Our drinks-led businesses are in growth and the forthcoming World Cup presents a further opportunity. In Destination, we anticipate an improvement in like-for-like sales trends over the second half-year against softer comparatives.
MARS numbers are seasonal, strongly weighted to second half,(H1 was about 33% of last years profit) and the guidance sounds hopeful, I trust there is more than hope behind it.
Market looks to be mildly unimpressed at the open.
Business is running well, but value of pubs has been lowered hence the loss. NAV per share is 147p (but this is VERY subjective, given pubs continue to fall in value and downward repricing will continue). We are really becoming a large scale brewer who runs a few pubs and owns some restaurants.
"On a statutory basis, the loss before tax was £13.4 million principally reflecting accounting adjustments relating to the estate valuation and changes in the fair value of interest rate swaps, both of which are non-cash items. The basic loss per share was 2.0 pence per share."
Strong organic growth in Brewing and from CWBB acquisition
- Total volume +74%, market share growth in premium cask ale to 23% and premium packaged ale to 24%
Managed and franchise like-for-like sales in line with last year
- Taverns like-for-like sales up 2.9%, D&P like-for-like -1.8% (drive-to destinations weather impacted)
- Average profit per pub up 1%
Operating cash flow up 6%, pro-forma leverage and pension deficit reduced
- Pro-forma leverage down 0.2x to 4.8x, fixed charge cover unchanged at 2.6x
- Triennial pension valuation - funding deficit reduced by £10 million to £40 million
good to see the sp well back over the pound level and a close at 104 is very welcome.
I will be celebrating tonight with a glass of Banks Amber Ale bought in Tesco's for
a very reasonable 90p and what with Tesco now being well on the road to recovery
with yesterday's excellent results its a cause for double celebration!
March was also one of the weakest months for pubs & restaurants, the Barclaycard data showed.
"On a short-term basis, this poor performance could create negative reactions in share prices of the pubs stocks as they update the market on trading," Barclays analysts said.
But they stressed this did not change their fundamental view on any stock, with a preference still for names where greater balance sheet strength is perceived, namely JD Wetherspoon and Greene King, rather than Marston's and Mitchells and Butlers.
does not surprise me that fewer people are eating out, the food is uninspiring, boring, poor quality and the service is poor. The tables are sticky and dirty, as are the glasses, with lipstick still on half of them. Look up to the lights and beams and see the cobwebs. When it comes to desserts it is even worse, a child of five could do better, same old same old. They are all the same. Dreadful.
Turkey, unless I have missed anything particular re Marston's, I think it is partly due to the doom and gloom in the eating out sector......general cost increases including wages, and an over supply of mediocre samey samey restaurants. Look at Zizzi, Jamie's, etc. Greene King are also having a hard time and are calling a halt to one of their foodie brands.
I am well under water on my investment and if things don't improve in the medium term, I may get out and take the hit. The divis are good but the SP ain't!
However, at the moment, I am struggling to see where my hard earned dosh could be usefully employed, so here's hoping for brighter times ahead!
That's what I was trying to indicate the shares are lower priced now virtually any time in recent history!
However in part it has been caused by a share split & a rights issue the latter of which the share chart here does not account for,but only part Marston's is one of the worst performing shares.I gave details of these in my post 5-12-2017.
Good info. When Marston's announced the purchase of Charles Wells I was sceptical because I thought it was an old brewery that probably needed a lot of investment. I didn't realise that it was fairly large and modern.
The market isn't convinced with Marston's at the moment so lets hope that the directors plans for the business will be innovative.
Buy the way, you mentioned the bottling line. Its good to have capacity ready for expansion etc but regarding contract work, I used to work in a bottling plant and we did contract work and there wasn't much money in it.
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