Full-year results from pubs and restaurant group
Mr Darby, who took up his post in October, is attempting to drive through a change of culture at the pub group aimed at boosting its operational performance. The idea has major attractions as MAB is widely regarded as having some of the best assets and brands in the industry and has proved popular, too, as the share price has now risen almost 50 per cent from its summer lows. An encouraging five percentage point increase in guest satisfaction and retail employee engagement suggests things are already beginning to move in the right direction.
The full-year numbers themselves were less inspiring, though. Like-for-like sales rose 2.1 per cent in the financial year and are flat in the eight weeks since the year-end. Cost-cutting could not completely offset inflationary pressures which meant operating margins slipped 30 basis points to 16 per cent in the retained estate and adjusted EPS rose 6.4 per cent to 30.5p after a one-off £6m tax-related hit in the interest charge. The dividend remains off the menu.
Broker Peel Hunt forecasts 2013 EPS of 34.1p (30.5p in 2012).
|Mitchells & Butlers (MAB)|
|ORD PRICE:||320p||MARKET VALUE:||£1.3bn|
|TOUCH:||319-320p||12-MONTH HIGH:||340p||LOW: 216p|
|DIVIDEND YIELD:||nil||PE RATIO:||19|
|NET ASSET VALUE:||265p||NET DEBT:||169%|
|Year to 29 Sep||Turnover (£bn)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Mitchells & Butlers has potential, but the shares look up with events priced on a forward PE ratio of 10, especially given the slow start to the new financial year. Hold.
Last IC view: Hold, 287p, 11 Sep 2012