Proactive Investors - Mitchells & Butlers PLC (LON:MAB) shares fell 7% to 225.51p after the pub company reported a rise in full-year revenue but profits fell in the face of “unprecedented cost headwinds”, although these pressures have now started to ease.
The operator of over 1,700 pubs and restaurants said revenue rose to £2.50 billion in the year to 30 September 2023 from £2.21 billion the year before, operating profit fell to £98 million from £124 million, hit by property portfolio valuation movements and the inclusion last year of a £52 million government grant.
At the pre-tax level, the owner of the All Bar One, Harvester, Toby Carvery, Nicholson’s and O'Neills chains dipped into the red with a loss of £13 million compared to a profit of £8 million before.
Like-for-like sales grew 9.1% against the year before, with 9.7% LFL growth in the second half, with record outperformance against the market while cost headwinds started to abate.
“A reduction in energy prices and slowing food inflation, in particular, mean that anticipated overall cost headwinds for the year ahead are expected to reduce to c.£65 million,” the company said.
“This should allow us to start to rebuild margins back towards pre-pandemic levels,” it added.
The company said trading since the period-end has been encouraging, though LFL sales growth slowed to 7.2%.
Sales growth continues to be broad-based across the brand portfolio and underpinned by stable volumes.
Chief executive Phil Urban said: “Whilst we remain mindful of the pressures that the UK consumer is facing, the strength of our sales growth alongside an abating cost environment gives us confidence for the financial year ahead.”
No dividend was paid.
Analysts at Peel Hunt (LON:PEEL) said underlying profits were ahead of the consensus forecast and with cost pressures easing, hiked their estimates for the new year.