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Mitchells & Butlers cheering Christmas

M&B's results were long on aspiration, but notably short on the detail of its turnaround and seasonal trading will need to be brisk
November 26, 2013

Mitchells & Butlers' (MAB) benefited from a mix of stable operating revenues and reduced interest charges that kept adjusted operating profits ticking up by 5.1 per cent to £312m for the year. The company cut capital investment by £19m, too, but it looks like a Christmas season that falls in the optimal mid-week slot is the key to building short-term momentum.

IC TIP: Buy at 417p

M&B's estate is increasingly weighted towards food and like-for-like food sales actually increased by 0.8 per cent. That did, however, reflect price increases and higher spending in certain areas rather than overall volume, which generally declined. Wet sales also continued their long-term downward trend with a 0.2 per cent drop, although excellent weather in the second half helped moderate the fall somewhat, and group like-for-like sales for the period grew 0.4 per cent. Management blamed the ongoing gap between the London market and its regional estate as the main reason why like-for-like sales in the first eight weeks of the current financial year were up by a modest 0.1 per cent.

Deutsche Bank forecasts adjusted pre-tax profit of £191m for 2014, giving adjusted EPS of 35.8p, up from £184m and 34.7p this time.

MITCHELLS & BUTLERS (MAB)

ORD PRICE:417pMARKET VALUE:£1.72bn
TOUCH:416-417p12-MONTH HIGH:475pLOW: 293p
DIVIDEND YIELD:nilPE RATIO:13
NET ASSET VALUE:296pNET DEBT:144%

Year to 28 SepTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20091.96-10.01.00nil
20101.98-127-20.6nil
20111.8013230.7nil
2012*1.8983.017.1nil
20131.9015032.9nil
% change-+81+92-

*53-week period