Pub companies have had a well-documented hangover after years of over-expansion and too much borrowing. However, it would be a shame to allow the sector's past woes to get in the way of buying potential bargains, and the often strife-torn Mitchells & Butlers (MAB) pubco is such an opportunity if it can maintain its operational improvements.
Operational gearing starting to boost profits
- Moderate expansion of pubs estate
- Pension-fund deficit becoming less acute
- Dividends should return next year
- Still plenty of debt
- Boardroom ructions
Mitchells does not need that much to go right for its own performance to improve. For example, its programme of operational improvements - including streamlining IT, refurbishing pubs and managing its menus better - has kept earnings growing, despite forecasts that like-for-like sales in 2013 will remain flat. The best that analysts at stockbroker Numis Securities can come up with is that like-for-like sales will nudge up by around 0.4 per cent.