New openings and strong headline figures disguised a slight dip in profitability at restaurant chain Prezzo (PRZ). Underlying sales growth and a move away from heavy discounting boosted margins at the outlet level, but these gains were offset by higher central costs and depreciation rates.
A slew of new openings buoyed adjusted cash profits by 13 per cent to £28.9m. While one unit closed during the period, another 28 opened, so that 237 restaurants were in operation by the year-end. This included 194 trading under the Prezzo brand, 37 as Mexican food chain 'Chimichanga' and four as new meat-centric offering 'Cleaver'. The Cleaver brand opened last summer and early trading is "encouraging", says chairman Michael Carlton.
The pace of new openings won't slow this year. The plan is for 25-30 new sites by the end of the year, with one already open and a further six under construction. The signature Prezzo brand is expected to add 18 restaurants to its portfolio, while Chimichanga should add seven and Cleaver three.
The company does not disclose like-for-like figures, but Numis believes underlying top-line growth was roughly 2.5 per cent. The broker expects adjusted pre-tax profits of £22.4m in 2014, giving EPS of 7.4p - up from £20.4m and 6.9p in 2013.
PREZZO (PRZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 152p | MARKET VALUE: | £354m | |
| TOUCH: | 151-153p | 12-MONTH HIGH: | 165p | LOW: 84p |
| DIVIDEND YIELD: | 0.2% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 46p | NET CASH: | £5.8m | |
| Year to 30 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 91 | 10.2 | 3.0 | 0.20 |
| 2010 | 105 | 14.0 | 4.3 | 0.225 |
| 2011 | 124 | 16.1 | 5.2 | 0.25 |
| 2012 | 145 | 17.3 | 5.7 | 0.275 |
| 2013 | 167 | 18.4 | 6.2 | 0.31 |
| % change | +15 | +6 | +10 | +11 |
Ex-div: 11 Jun Payment: 4 Jul | ||||
