Slowing sales growth shows life isn't getting any easier for Mitchells & Butlers, owner of some of the biggest pub and restaurant names in the UK – including All Bar One and Harvester. And with no sign yet of a new chief executive, or a dividend, we'd still give its shares a wide berth.
Like-for-like sales growth was a steady 2.7 per cent in the period, but the rate has steadily worsened throughout the year so far – underlying sales rose 2 per cent in the 33 weeks to 12 May, implying a decline in the seven weeks since the period ended. Management blamed the recent wet weather for the slowdown and said the group was on track to hit full-year targets, despite a 70 basis point drop in operating profit margins as a result of higher food and energy costs.
New openings also helped to overcome the soft underlying trading and meant underlying pre-tax profits climbed 8 per cent to £68m. Some 35 new outlets were opened, the majority of which were in leisure and retail parks, but cost pressure has seen cash returns on expansionary capital drop from 21 per cent to 17 per cent.
Broker Numis expects full-year underlying pre-tax profit of £174m, giving EPS of 31.4p (£156m and 27.7p in 2011).
MITCHELLS & BUTLERS (MAB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 231p | MARKET VALUE: | £946m | |
| TOUCH: | 231-232p | 12-MONTH HIGH: | 335p | LOW: 211p |
| DIVIDEND YIELD: | nil | PE RATIO: | 8 | |
| NET ASSET VALUE: | 274p | NET DEBT: | 166% | |
| Half-year to 7 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 946 | 43.0 | 9.10 | nil |
| 2012 | 969 | 42.0 | 8.80 | nil |
| % change | +2 | -2 | -3 | - |
