20th Nov 2019 08:44
(Alliance News) - Mitchells & Butlers PLC on Wednesday reported "strong" growth in financial 2019, with an increase in profit driven by a rise in sales.
The FTSE 250-listed pub manager was 7.0% higher at 477.00 pence in London in early trading.
In the 52 weeks to September 28, Mitchells & Butlers recorded GBP177 million in pretax profit, 36% higher than the GBP130 million reported the year before.
Revenue grew 4.2% year on year to GBP2.24 billion from GBP2.15 billion, with total sales up 3.9%.
"The work we have undertaken, principally through our Ignite programme of initiatives, is driving a strong trading performance and generating profit growth whilst we continue to invest in our estate and pay down debt," the company said.
Total like-for-like sales grew by 3.5%, with strong performances across all of Mitchells & Butlers brands contributing to "continued, consistent outperformance" of the market, the company added.
Like-for-like food sales were up by 3.4% and drink sales grew 3.2%. Average spend per item on food was up 3.4%, and average drink item spend up 4.5%, with Mitchells & Butlers attributing this to strengthening of prices and increasing "premiumisation" across its estate. Other sales, including accommodation and machine sales, grew at a higher rate than the year before, boosting total like-for-like sales growth.
Mitchells & Butlers will pay not dividend for the year, having scrapped its payout the year before, citing a challenging eating-out industry.
Chief Executive Phil Urban commented: "These strong results reflect the work we have done over the last few years, first to build sustained sales growth and then to convert that into profit growth.
"It has been extremely encouraging to see an improvement in like-for-like sales growth across the portfolio during the year, fuelled by our Ignite programme of work. This puts us in a stronger position as we move forward into the next financial year, in what we expect to remain challenging market conditions."
Ignite is the name of the company's long-term strategy. Mitchells & Butlers completed 240 remodels and conversions during the year - compared to 232 last year.
"Ordinarily we expect a drag on profit in the year of investment due to lost trade during closure and the cost associated with opening the invested business. This year we have been focusing on enhancing the 'in year' return of our investment projects and have eliminated profit drag by reducing closure time, more efficient use of resources and setting businesses up for success from the first day of trading," the company added.
In the first seven weeks of the new financial year, Mitchells & Butlers said like-for-like sales have grown by 1.4%, having "continued to outperform the market in a period of adverse weather".
The company added: "The market remains challenging with a high level of macro uncertainties, but we will remain focused on maintaining a strong balance sheet and reducing our net debt whilst positioning the business to generate value for our stakeholders."
By Paul McGowan; [email protected]
Copyright 2019 Alliance News Limited. All Rights Reserved.
Related Shares:
Mitchells & Butlers