Brewery to shelve £70m new-build investment plans

General view of The Poachers, Chirk. credit:
X The Business Desk

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Wolverhampton-based brewery, Marston’s is to defer £70m worth of new-build plans in an attempt to reduce its net debt of £200m and raise cash flow.

The beer maker said at the start of the year that its target was to reduce net debt by £200m from 2020-2023 through reduced capital expenditure, which would result in £120m of disposals and a reduction in interest and pension costs.

Now it has updated its plans and decided to accelerate the timeframe within which the debt reduction target is achieved.

As a consequence, it is proposing to defer £70m of the new-build investment planned for the next three years and reallocate £20-30m of funds into its organic capital plans, which it says are generating significantly higher returns.

The earnings impact of this capital reallocation it said would “be minimal, and this will generate an additional £40-£50m of cash flow over the next three years”.

Earlier this month reported that Marston’s was in the process of selling the Pitcher and Piano chain for between £30m and £40m, which includes a canal-side restaurant and bar in Birmingham’s Bridleyplace.

“We have achieved modest growth during the 42 weeks to date continuing the long term positive like-for-like sales trend despite May and June being hampered by relatively poor weather,” said Ralph Findlay, Chief Executive Officer.

“We have a high-quality, balanced pub estate and a highly disciplined approach to preserving margin, together with a leading beer business which continues to perform well leveraging our outstanding brand portfolio and increasing our market share.”

The company said like-for-like managed and franchised pub sales increased by 0.5% over the past 42 week period.

In destination and premium, like-for-like sales for the 42 week period it was  0.1% ahead of last year and in taverns, like-for-like sales for the 42 week period were 1.1% ahead of last year.