Marston's Share Discussion Threads

[janekane] 25/1/2019 09:15

Have we been mentioned in a tip sheet or national paper today

[chinese investor] 25/1/2019 09:12

Fullers have sold its beer brewing business today for £250m to Asahi of Japan.

100p Soon !

[lindowcross] 25/1/2019 08:54

Fuller has sold its beer brewing business today for £250m to Asahi of Japan. Is anyone up for making a wild guess on the value of Pedigree, the other brands & breweries?

[deanowls] 25/1/2019 08:40

Sold at a x24 multiple as well.

[chrisdgb] 25/1/2019 08:25

Fair point, there is clearly value, what will be the catalyst.........??

[cc2014] 25/1/2019 08:13

• Fuller, Smith & Turner is to sell its beer business to Asahi.
• The company says it has ‘entered into an agreement for the sale of its entire beer business to Asahi Europe Ltd…for an enterprise value of £250 million on a debt free, cash free basis.’


FSTA up 16% on this. Surely it's worth a few percent on MARS also.

[quady] 24/1/2019 19:33

Jeffian - agree and yesterday's announcement will only ram home the low growth story. I didn't get any sense yesterday (nor in the annual report) of a forward thinking business with new ideas and a plan. Just some tinkering and awaiting 'uncertainty' to clear. The chair might be disappointed if he thought the market would roll out the red carpet on hearing the target is to reduce debt by a whooping £50m/year but with the sacrifice of little/no investment in higher margin business. A lot of chat from the floor was around the beer business (I include my question in that) yet that's neither where the revenue is, let alone the profit. You're right about canning, the CFO happened to mention that one of the benefits of getting a new canning line was to have additional capacity to can for other companies. That is more low margin, non-core activity. They've bought it now mind so not much point protesting.

[quepassa] 24/1/2019 11:07

LEST ANYONE FORGETS.

This is verbatim what Marston's told shareholders and the market just two months ago with the Prelims on 21st November 2018:-


"Dividend cover is 1.9 times and our dividend policy remains to target progressive increases in the dividend at a cover of around 2 times in the medium term."


"Progressive increases" in dividend in the medium-term.

Yeah, right....



Just eight weeks later and it's already a very different story of just maintaining the dividend.


How quickly things change.

The question for me is if in two months, Marston's have gone from declaring a dividend policy of "progressive increases" to a policy of "maintaining the dividend at the current level during this period", how much faith can you put in what they say?

Can you rule out the possibility that they won't actually reduce the dividend in the current uncertain outlook?

I know what I think.

Good Luck All



ALL IMO. DYOR.
QP

[jeffian] 24/1/2019 10:20

2-for-1's may pull in the punters and be good for revenue, but they slash profit margin! It's a bit of a vicious spiral, as once one pub in the area starts to do it, the others almost have to follow and it's hard to get back to full price. As retailers have found out with their pre-Christmas sales and Black Friday promotions, you don't sell any more, you just end up selling it cheaper!

Thanks to quady for the AGM report. Whilst the debt issue seems to have become important for this company, I think it misses the point about share price underperformance. ("He also acknowledged share price decline over the last year and said he hoped by the next meeting the market would have changed its view.") The fundamental reason why the shares are going nowhere is their profit growth performance has been so pedestrian and consistently behind their peers. They need to focus on boosting margins, profits and earnings per share and I'm afraid that investing in more breweries, brands and canning lines is not going to do it. It's all highly capital-intensive, low margin stuff. There is a certain romanticism in the industry because many of us like our beers and we love to see great ales properly produced, but in a public company the head has to rule the heart and if you look at the higher-rated brewers, they either focus on a limited range of beers (like Fullers) or have given up brewing and get someone else to do it for them (like Youngs). Regardless of steps to reduce debt, I don't see this share getting a decent rating unless and until we see some decent profit growth.

[porsche1945] 24/1/2019 10:10

Too debt on its balance sheet and pretty average management. Needs to stop trying to expand into an already saturated market, the one thing that could boost this company is brexit being cancelled or kicked down the road forever, the bounce in sterling would make everything they buy in alot cheaper, sterling gets back to 1.35/40 thats where these shares could get back to also.

[cheshire man] 24/1/2019 09:50

The Deacon..... I thought that may have been a mistake too but the quality of food and service being offered under the new format is far better and feel they've really upped their game,,,,,,,,,time will tell of course

[lord gnome] 24/1/2019 09:38

You and me both tallprawn. There are a lot of bargains in the market at present, so no need to rush.

[speedsgh] 24/1/2019 09:36

Comment from Langton Capital on yday’s post-Trading Update analysts meeting…



MARSTON’S Q1 CONFERENCE CALL:

Marston’s hosted a conference call following its update on trading to 19 January 2019 and our comments are set out below:

Trading:

• Says sales were ‘satisfactory’. This because margins are being held. Top line LfL sales are not up as much as some competitors.

• Cost mitigation targets are unchanged. MARS is in a slightly better position here as it has fewer units in London and certain city-centres than do some of its competitors.

• Will lower maintenance capex impact LfL sales? Understood but the new build pubs will need less attention & many of the disposals have been of units that require(d) more upkeep.

Balance Sheet & Debt:

• Why do this now? Uncertainty. This is worse than it was a year ago. Also, asked investors. The market has not been rewarding the previous policies over a sustained period of time.

• Group should enhance equity value by reducing debt. It will be clear that the co is not paying dividend out of debt.

• It is ‘prudent for debt reduction’ to take a greater precedence. Debt will be down £200m over the next four years with a held dividend.

• Debt should be ‘below 5x’ within the 5yrs under review.

• Sale & leaseback? Not likely to be any this FY.

• There will be reductions in the level of maintenance capex. The £25m reduction in new build means say 5 fewer new-build pubs and 3-4 pubs with lodges. There is still room for selective corporate activity.

• There are c100 pubs on the books at any one time that MARS is likely to be looking to sell.

• Pension benefits should be in the region of £5m p.a. post the group’s next triennial review

• The group is ‘looking at’ securitisation issues but, as the mark to market hit would be significant at present, this may only occur over time. Will move when the NPV is right.

• What EBITDA will be lost on the pubs to be sold? Perhaps £5m – but this will be mitigated by interest savings.

Langton Comment:

• Marston’s has updated further on its plans to cut debt by £200m over the next four years. The group confirms that it will hold its dividend at current levels.

• Trading is not easy, but Marston’s has a estate of well-managed and well-maintained, largely freehold properties. It is selling product that the consumer would like to buy at a price they are prepared to pay. Lodges, craft brewing and food (in the longer term) remain growth areas. Marston’s is a major brewer and has a large wet-led element to its estate and is well-placed to grow and to create further value for its shareholders.

[tallprawn] 24/1/2019 09:11

Back to 90p then on the chart.. Will look for a re-entry point around that level if it holds.

[quady] 23/1/2019 21:15

OK, AGM. First time attendee. Seemed to be long time small shareholders and their proxies. Bacon baps available at the start, tea and biscuits after (apparently this is important). Chair seemed keen to give the message he had spoken to shareholders since joining and has listened to their concerns about the debt. Implied direct influence in the change in tac due to this. He also acknologed share price decline over the last year and said he hoped by the next meeting the market would have changed its view. Ralph gave a presentation which I'm sure will go online. Honestly not much of note if you're abreast with what has happened over the last couple of years. Good orator, spoke well and calmly seemingly with few notes. Avoided Brexit, purposefully. Questions from the floor were 'interesting'... a few folk questioned increased costs, answer - 'the business has increased in size, costs have risen accordingly but we operate cost control'. Few folk said they were concerned about debt so welcomed focus on that. Question raised (I presume from redartbmud) as to whether exec pay will be frozen along with the divi. Technally wasn't ruled out, but implied 'no', rational from the chair being the board are trying to balance improving three things, profits, debt and divi. Tbh I buy that, they board could raise the divi 10% a year for the next five years, reduce debt but the estate would go to pieces, or raise divi and balloon the debt. redartbmud spoke to the CFO after business had closed (redartbmud I was the chap sitting behind you and happened to join that conversation) that the market wasn't rewarding divi increases. Then the questions got barmier.... Perhaps gluten free and vegan beer will resuscitate the group? Being looked into. Canabis beer? Perhaps in the future. A chap suggested two 'free ways' to reduce the debt, the ideas being a rights issue, cut the divi or give it as a scrimp. Chair suggested the questioner might be in a minority of one about the rights issue idea and that the institutional investors he had spoken with appreciated the cash divi. A shareholder and farmer asked the board if 'given the debt whether the board was confident malt suppliers would be paid'. Seemed mad to me, Ralph seemed bit annoyed and just said 'YES' 'Very confident'. Someone had a ramble about the lack of lunch, suggested if a brewer was on the board then a proper lunch would've been given and asked if a brewer would be put on the board. Ralf gave an explanation of current and previous board makeup, largely saying when heads of business units were on the board the board became unwheldy and that current best practise was for Chair, CEO, CFO, company sec and NEDS. Last question happened to come from me which was when would the CW aquisition start adding positively to EPS. Was told an addional £1m of efficiencies this year would mean it would start contributing positively in 2019. Still skeptical. I spoke to the CFO after the meeting about the £8m canning line which has been bought, which was due to have been a win from the CW aquistition. Seems it will be held as a backup rather than disposed of. On the £80-90m 'non-core disposals' these were land, pubs without licences, pubs due to be closed and flats not used by Mars other than for rental. Disposal and stopping the interest would save more than the current yield. Bacon baps pre-AGM, tea and biscuits after. £10 voucher given to all yet the biggest moan seemed to be AGM timing and lack of lunch.

[the deacon] 23/1/2019 20:37

I question some of the decisions being made at this time. My local Marston's does a great trade as a 2 for1. The pub is regularly packed and families spend quite a bit of time there. Getting rid of the 2 for 1 and replacing it with a premium outlet really is a terrible decision.

[quady] 23/1/2019 19:13

Not really. The greatest contention was the time of the AGM (too early so hard for small shareholders to travel to) and catering at the AGM (seems to be an expectation of a lunch and pint to 'sample', which had been economised). I suspect whilst those issues exercised the greatest response from the floor, the Directors won't be too concerned about their positions.

[spacecake] 23/1/2019 17:57

Any 'Marstons needs shaking up' comments at the AGM today ?

[zcaprd7] 23/1/2019 11:38

Perhaps, but I assume low interest rates and the property portfolio underpin the debt, and both would unravel fast in a worse case scenario...

[quady] 23/1/2019 10:24

Jeffian - any ideas on annual total average return over that period? Here today perchance?

[jeffian] 23/1/2019 10:14

So did I. Over 25 years ago!

8-(