Rising input costs - including a big tax bill - are a big headache for JD Wetherspoon (JDW). With the pub operator reluctant to pass the burden on to cash-strapped consumers, it's having to run hard just to stand still.
Operating costs were 11 per cent higher, so that higher-than-expected top line growth - like for like sales grew 7 per cent in the first half - was offset by weaker margins. Underlying operating profits slid 2 per cent to £52.1m, representing a margin contraction of 1 percentage point to 8.3 per cent.
There was considerable inflation in the cost of labour, utilities and bar and food supplies. The company made much of a £23.4m hike in the indirect tax bill - mostly VAT and alcohol duty - but taxes actually grew by 9.4 per cent, less than other inputs. Chairman Tim Martin, nonetheless, complains about unfair competition from supermarkets, which face lower taxes.
Despite a 2.7 per cent fall in underlying pre-tax profits, EPS rose 3 per cent to 20.8p, thanks to a £23m share buyback. Wetherspoon has also increased the number of pubs it plans to open this financial year from 25 to 30.
Broker Numis Securities expects EPS of 40.3p for the full year, rising to 44.2p in 2014 (from 41.3p in 2012).
| JD WETHERSPOON (JDW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 518p | MARKET VALUE: | £653m | |
| TOUCH: | 517-519p | 12-MONTH HIGH: | 554p | LOW: 367p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 154p | NET DEBT: | 272% | |
| Half-year to 27 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 569 | 33.2 | 18.3 | 4.0 |
| 2013 | 626 | 34.8 | 20.8 | 4.0 |
| % change | +10 | +5 | +14 | - |
Ex-div: 1 May Payment: 30 May | ||||
