- Third quarter like-for-likes up 5%
- Full year profits seen at top end
- Refinanced bank facilities
Pubs and restaurants group Mitchells & Butlers (MAB) served up market beating third quarter trading and said it expects to deliver annual results at the top end of consensus forecasts.
Having initially opened more than 2% in the green, the shares settled down to trade 2p or 0.7% higher at 290.5p, taking the year-to-date gain to 18%, comfortably ahead of the 7% advance in mid-cap FTSE 250 index.
Third quarter like-for-like sales growth for the 14 weeks to 19 July was 5%, well ahead of the market, supported by favourable weather and the timing of Easter.
CEO Phil Urban commented: ‘The business continues to perform strongly, enabling us to meet the cost challenges facing the sector with confidence.
‘We will remain focused on our Ignite programme of initiatives and our successful capital investment programme, driving cost efficiencies and increasing sales.’
Consequently, the company said it is confident current momentum will lead to full year profit to the end of September being at the top end of consensus analyst expectations.
EARNINGS UPGRADE
Greg Johnson at Shore Capital noted Bloomberg consensus operating profit of £322 million is already close to the top of the £316 million to £325 million range.
‘We nudge up our (in line) estimates by £3 million to £325 million accordingly (EPS of circa 30p and up circa 14% year-on-year), although see scope to beat at the year-end assuming the weather remains fair,’ said Johnson.
‘Conservatively, at this stage, we continue to anticipate a broadly flat year-on-year performance at the pre-tax profit level next year, reflecting challenging comparatives and further cost press,’ he added.
The company said it has completed 150 conversions and remodels and opened two new sites, in addition to the purchase of two freehold interests in existing sites.
The All Bar One operator successfully refinanced its unsecured debt facility on lower margin terms and extended it to July 2028. The £150 million revolving credit facility remains undrawn.
Johnson sees a full restructuring of the company’s securitisation structure as a catalyst for a re-rating of the shares, freeing up ‘significant’ cash flow to shareholders.
