In spite of rising costs and a difficult trading environment, pub chain owner Mitchells & Butlers (MAB) posted a surprisingly strong update for the year to September, prompting analyst upgrades.
The number of restaurants in operation fell 3.4 per cent in the year to June. In spite of this, MAB saw like-for-like sales growth of 3.5 per cent, while adjusted operating profits were up 4.6 per cent to £317m. Meanwhile, the group’s Ignite efficiency initiative drove profitability improvements, with adjusted operating margins up 10 basis points to 14.2 per cent, in spite of £6m-worth of cost inflation across food, drink and logistics.
Management has been working through its remodelling programme, converting or refurbishing 240 sites during the year. It has been working to reduce the profit drag caused by lost trade when pubs are closed, with improvements pushing returns on conversion and acquisition investments to 21 per cent, up from 16 per cent last year.
Broker Peel Hunt is now expecting adjusted pre-tax profits of £202.9m, giving EPS of 37.9p in 2020, versus previous forecasts of £200m and 36.9p.
MITCHELLS & BUTLERS (MAB) | ||||
ORD PRICE: | 471p | MARKET VALUE: | £2.02bn | |
TOUCH: | 469.5-471p | 12-MONTH HIGH: | 483p | LOW: 237p |
DIVIDEND YIELD: | NIL | PE RATIO: | 14 | |
NET ASSET VALUE: | 454p | NET DEBT: | 80% |
Year to 28 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2015 | 2.10 | 126 | 25.0 | 5.0 |
2016 | 2.09 | 94.0 | 21.6 | 7.5 |
2017 | 2.18 | 77.0 | 15.1 | 5.0 |
2018 | 2.15 | 130 | 24.5 | nil |
2019 | 2.24 | 177 | 33.5 | nil |
% change | +4 | +36 | +37 | - |
Ex-div: | na | |||
Payment: | na | |||