Mitchells and Butlers starts 2015 strongly after results hit target
Restaurants and pubs operator Mitchells & Butlers said a challenging market was to blame for its falling earnings and continuing lack of dividend, as underlying full year profits made a small gain on the previous year.
FTSE 250
19,678.78
13:25 23/04/24
Mitchells & Butlers
234.00p
13:04 23/04/24
Though sales rose 4% year-on-year to £1.97bn, pre-tax profit before exceptional items rose 0.6% to £172m reflecting an expected decline in profit margins of roughly 50 basis points.
Statutory earnings fell 28% to 22.6p, but if exceptional items are stripped out earnings rose 1.2% to 32.6p.
"In the last year we have made significant progress, investing in the business for future growth. We completed the acquisition of Orchid, accelerated remodel and expansionary capex and have made a substantial investment in our systems,” said group chief executive Alistair Darby.
“At the same time we have maintained our focus on the delivery of our four key priorities. In the year ahead, we will continue these actions."
While like-for-like sales growth had been just 0.6% in the year to 27 September, like-for-like sales growth in the first eight weeks of the new 2015 financial year have so far been up 2.4%, albeit against historically weaker comparative trading.
Darby said that while the drinking-out market was suffering from an ongoing structural decline, food-driven businesses were growing and the company was reaping the benefits from being focused on eating-out.
With momentum improving in the new financial year, Darby said he expected the business to benefit from its investments during the current financial year and that that, while management are mindful of the attraction of resuming dividend payments, this will only be done when cashflow covers bond amortisation.
Broker Shore Capital said profits were consistent with its expectations and that "a significant dividend payment appears unlikely in the near-to-medium term".