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(Sharecast News) - Pub chain Marston's reported a jump in sales on Wednesday as it hailed good levels of demand.
In an update for the 42 weeks to 22 July, the company said like-for-like sales rose 10.7% versus the same period a year earlier. Both drink sales and food sales have been strong, Marston's said, "demonstrating the steadfast trading resilience of our predominantly community pub estate".
In the 16 weeks to 22 July, meanwhile, LFL sales were up 10.9%, thanks to warmer weather in June. Marston's said the level of customer demand remains "good".
Chief executive Andrew Andrea said: "Marston's has delivered another strong trading performance"
Experienced Investors need to know Net Profits. Sales can be bought through heavy discounts.
SC you appear to have an insiders view, what is the Net Profits?
FairDealer - SC has repeatedly shouted partial pictures of the company's business situation. He has not demonstrated any inside view - which would be illegal anyway.
The post from FINANCEmagic below does not actually provide any info on costs and other expenditures, expect the phrase "energy cost savings" but note that Marston's said it had its gas (or energy as a whole?) costs set to 2024 so it is likely less impact by the probably decrease of energy prices this quarter because its energy costs were (relatively) lower in the first place due to that prior arrangement.
What sticks out like a sore thumb, and which everybody vocally praising Marston's has carefully avoided mentioning, is the interest rate rises of the past 18-20 months. The pile of debts from Marston's was fine with low interest rates, but with the fast recent increases, that puts the business under extreme pressure.
Sure, some lender have set interest rates for several years ahead, but those loans are mostly staggered and regularly reevaluated.
Thus, there is no 100% clear information as to how close to the edge Marston's is (or not?) due to its debt pile, which probably explains why Marston's has been lingering near the bottom while other pub companies have risen well above in the meantime.
Lejjb
Firstly I agree with your comment re "SC...repeatedly shouted partial pictures" etc, a very accurate assessment, imho.
However, concerning the debt, I have an email conversation with Findlay, the previous CEO from 2016 which is still both relevant & disconcerting in 2023 and I quote ;
"of total debt of £1.273bln, £853mln is long term, (out to 2035) & secured on freehold properties. It is at a fixed rate of interest of approximately 6% (fixed at some time in the mid 2000's). To repay this debt would incur a very significant redemption penalty"... and then it goes on to discuss the other debt which is less inflexible.
I suggest that this is why the debt reduction programme is so modest relative to their current debt mountain.
I guess paying 6% today with base rate at 5.25% is respectable but it does not take very long to work out what paying 6% when base rates were at nothing to a jjam tart over such a period of time led to under investment & ultimately sellng off control of the real jewel, their brewery.
However as I also posted that with the SP down here in a 30p dustbin it is option money (& of course every dog has its day).
Thus I believe Mr Market is about right, yes they might get lucky & sell off a bunch of pubs or they will continue to wallow in the gravel & grit that they are currently in.
Personally I would much prefer to re read what Findlay wrote then, which is even more relevant today without control of the brewery & having gone through lockdowns, than "poundland puffs" every few days from the usual suspects.
Barchid, thank you. That is really interesting and puts a whole different perspective on their debt.
I’ve invested in marstons today because I think that the share price decline was mainly to do with covid and the fact that the properties marstons own/rent devalued because everyone thought that hospitality was doomed etc …it’s all connected
Can’t wait to see their figures over the next 3/6 months plus properties will be valued more adding even more value!!
All in my opinion
I have posted previously on the debt issue. Marstons is nibbling away at its debts, but the real reduction is coming about in the effect of inflation. With 10 % inflation over a year a billion pound debt is reduced by 100 million in real terms. 6% interest on a fixed rate secured loan seems pretty steep but then there is tax relief on the interest. We have had 10 percent inflation in the last year, assuming 5 % this year and (an unlikely optimistic) 2% and a 50 million repayment per annum and over seven years the actual real debt is about 430 million, and if sales increase in value by the rate of inflation then the debt ratio becomes even smaller. Inflation is the debtors friend and the savers enemy, something my generation have experienced but perhaps not many of the commentators here.
You can't say that a billion pounds of debt is reduced by £100 million in real terms thanks to 10% inflation without taking into account the amount added to the debt in interest payments, which at around 6% would be £60 million. It will take Marstons decades at their current rate of progress, to reduce their debt significantly and maybe the banks won't want to have to wait that long.
Robcodsall - your points are correct except for your suggestion that banks will become impatient. It’s not usually the case: so long as the borrower meets its payments deadlines, a bank is fine with a long-term loan repayment scheme as it means the bank keeps getting a steady income.
The company has to pay the annual interest on its loans without fail or the banks will become tricky. As long as the interest is paid, then inflation will erode the real size of the debt. Companies can also claim tax relief on interest but not on capital repayment so nibbling away at the debt makes sense. Repaying 50 mil each year and ten percent inflation is going to see this debt as a fraction of value and turnover fall quite significantly.