Marstons 'confident' on H1 as profits rise 0.4 pct

Martons, the operator of more than 2,150 pubs across the country are confident of meeting this year's forecasts.

The pub group met analysts expectations during first half, with a 0.4 pct rise in profits on last year's results. This was despite tough trading conditions that have affected other pub operators such as Enterprise Inns which reported profits down by 20 pct last week.

Ralph Findlay, Chief Executive, commented:

"We are pleased with the encouraging performance of the business in the first half year. The economic environment remains challenging, but there are two key areas which provide the basis for continuing outperformance in this market: our new-build programme for large managed pub-restaurants; and the introduction of innovative agreements in our tenanted and leased pub estate."

Profits at the pub were £27.8m to April 3 and Findlay was confident the trend could continue:

"Recent trading has been in line with our expectations. In our managed house business, like-for-like sales for the six weeks to 15 May were 1.2% above last year and trends in Marston's Pub Company and in Marston's Beer Company are consistent with those reported for the half year."

"We are confident of meeting our expectations for the year as a whole." he added.

Hugh Guy-Lorriman, equity analyst in Leisure Research at Seymour Pierce, offered this comment:

"Marston's has announced its interims this morning. PBT is up 0.4% to £27.8m vs. £27.7m in the prior year. EPS is 3.6p vs. 3.5p (restated, nb. rights issue). Our forecasts for FY2010 remain unchanged."

"The LFL trends are satisfactory with managed LFL sales +1.4% in the period and +1.2% in the last 6 weeks. The 4.5% decline in LFL profit in the tenanted division is a strong performance compared to peers and appears to be a fully loaded figure - i.e. not profit per pub, not excluding the impact of pub sales etc. The beer company is also trading in line with expectations with operating profit +1.4%."

"We remain buyers of Marston's as the 'unloved' value play of the pub sector noting the recent (March 5th) report by Standard & Poors affirming their ratings on Marston's which we believe underpins the quality story in the Marston's portfolio and hence the stock."

Hugh offers a target price of 120p with a 'buy' rating currently.