Martson’s shares rose sharply on Wednesday after the pub group said it expects to serve up stronger profits than previously expected.
The group, which has been struggling to lift margins back to pre-Covid levels, attributed a ‘step-change in profitability’ to margin growth achieved via ‘revenue management, labour efficiency and procurement initiatives’.
The London-listed company said like-for-like sales were 1.6 per cent ahead of a year ago, down from the 2 per cent growth reported after 41 weeks of the year.
In an update for the year to September, Marston’s said it was ‘poised to drive further financial and strategic progress’ after ‘another year of strong profit growth’.
Underlying EBITDA margins are expected to rise by more than 100 basis points year-on-year as the firm delivers on the financial targets outlined at the capital markets day last October.
Shares in Marston’s rose 10 per cent early on Wednesday and were up 6.71 per cent or 2.60p to 41.35p after 9.15am.
Upbeat: Pub group Marston’s saw its shares jump after posting an upbeat profit update
Recurring free cash flow expected to be in excess of the targeted £50 million, ahead of schedule, with year-end net debt to be five times EBITDA.
The group completed 31 pub format refurbishments during the period. The invested sites are ‘trading strongly, delivering average initial revenue uplifts of 23 per cent’, according to the business.
Justin Platt, chief executive of Marston’s, said: ‘We have delivered another year of strong profit growth and significantly improved recurring free cash flow, providing us with continued opportunity to invest in our estate, reduce debt and unlock long-term value for shareholders.’
He added: ‘Our differentiated pub-formats are already delivering impressive results with a defined plan to accelerate this further in FY2026.
‘With clear strategic priorities and disciplined execution, we enter the new year with strong momentum. Our results demonstrate we are delivering as a high-margin hospitality business, and with our formats growth engine showing great promise, we are poised to drive further financial and strategic progress.’
Chris Beauchamp, chief market analyst at IG, said: ‘Marston’s has served up a round of very solid news this morning, which comes as a contrast to Wetherspoon’s more cautious update last week.
‘The shares have rocketed higher as a result, bolstered by news that margins have improved, though they remain much closer to their post-Covid low than the highs of late 2019.’
Last week, JD Wetherspoon sounded the alarm over the price of a pint and a meal, as it revealed it will fork out £7million on elements other than power in its electricity bill.
Wetherspoon’s warned of higher inflation in the coming months, with new subsidies for nuclear power set to drive businesses’ energy costs even higher.
The pub group says this adds to other costs, including £60million extra from the government’s employer National Insurance rise and £2.4million from the packaging tax.
Wetherspoon’s has been struggling to return to pre-pandemic levels of profitability, as soaring energy and wage costs have offset a sharp rise in sales.
It says energy and labour costs had risen 57.8 and 34.5 per cent, respectively, since 2019.
Wetherspoon’s, which operates nearly 800 pubs across the UK, posted a 5.1 per cent increase in like-for-like sales over the year to 27 July, at £2.13billion. Pre-tax profits rose 10.1 per cent to £81.4million for the year.
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