As inflation rises, Mitchells & Butlers (MAB) is treading a fine line between price increases in some areas and reductions in others, while doing its best to encourage pubgoers to spend more on premium products. That's to compensate for increased expenses from wage and cost inflation, as well as higher property costs: the adjusted operating margin was 90 basis points lower at 13.3 per cent. This is likely to be a hangover that lasts. Consumer confidence is likely to remain fragile as wages don't keep up with the rise in prices.
Like-for-like sales at the group, which owns All Bar One and Nicholson's pubs among others, were up 1.6 per cent in the reported period, driven primarily by drinks. But volumes for food and drinks fell by 4.8 per cent and 1.8 per cent, respectively, even though the average spend across both was up as consumers opted for higher-priced choices. Management hopes that social media and its six branded apps, with a total of 825,000 downloads so far, will help push consumers into restaurants like Browns and Harvester over competitors.
Analysts at Stifel expect adjusted pre-tax profits of £184m for the year to September 2017, giving EPS of 35.3p, compared with £181m and 34.9p in FY2016.
| MITCHELLS & BUTLERS (MAB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 257p | MARKET VALUE: | £1.08bn | |
| TOUCH: | 255.9-256.5p | 12-MONTH HIGH: | 304.8p | LOW: 207p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 362p | NET DEBT: | 120% | |
| Half-year to 8 Apr | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 1.10 | 83 | 18.4 | 2.5 |
| 2017 | 1.12 | 75 | 13.7 | 2.5 |
| % change | +2 | -10 | -26 | - |
Ex-div: 25 May Payment: 3 Jul | ||||
