Mitchells & Butlers: Shares rise at All Bar One owner as profit hits £164m
The owner of All Bar One, Mitchells & Butlers, said half-year profit soared to £164m despite an “unavoidable” decline in pubs and restaurants across the sector over the last year.
The no frills pub chain flagged the impact of industry wide challenges on market supply, with a 2.5 per cent net decline in pubs and restaurants in the year to March and a 15 per cent net decline since the beginning of Covid-19.
But operating profit rose nearly 64 per cent from last year’s £99m, driven by growth in total sales to £1.4bn, up nearly 10 per cent amid increasing spend per head.
Shares rose nearly 10 per cent by early afternoon.
Mitchells & Butlers, which owns Toby Carvery as well as All Bar One, said cost inflation started to ease in 2023 and this continued through the first half. A recent 10 per cent increase in the National Living Wage was “relatively high,” however other costs generally returned to “more normalised levels,” particularly energy.
“Strong and resilient sales growth through the first half combined with a clear abatement in overall cost inflation has driven a marked increase in both profitability and margins,” the FTSE 250 firm said in a statement to markets.
Phil Urban, Chief Executive, said: “Continued like-for-like sales outperformance against the market coupled with easing inflationary costs and focus on efficiencies has resulted in very strong profit recovery for the period.
“We remain focused on our Ignite programme of initiatives and our successful capital investment programme, driving further cost efficiencies and increased sales.
“We have confidence that continued focus on effective delivery of our strategic priorities will generate further value from our enviable estate portfolio and customer offers, enabling us to build further momentum throughout the year, with a strong foundation for long term outperformance.”
Looking ahead, cost headwinds are anticipated to reach around £55m this financial year, slightly less than previously expected, with increases in labour costs due to the National Living Wage rise mitigated by deflation in energy and slowing food cost inflation.
“As trading continues to be strong, we have confidence that the current year outturn will be at the top end of consensus expectations, with momentum for further progress going forward into FY 2025,” the company said.