This article first appeared on GuruFocus .
-
Operating Profit:GBP181 million, maintained despite cost headwinds.
-
Earnings Per Share (EPS):Increased by 3.6% due to debt reduction and lower interest charges.
-
Like-for-Like Sales Growth:3.3% increase across the first half, with Q1 at 4.5% and Q2 at 1.8%.
-
Capital Expenditure (CapEx):Increased to GBP117 million, with full-year guidance up to GBP230 million.
-
Net Debt:Reduced to just under GBP750 million, approximately 1.6x EBITDA excluding leases.
-
Net Assets:Increased to GBP4.91 per share.
-
New Sites Acquired:5 new sites in the first half, with additional acquisitions post-balance sheet date.
-
Cost Inflation Forecast:GBP95 million for next year, representing about 4% of the cost base.
-
Carbon Footprint Reduction:16% reduction versus 2019 baseline, including a 22% reduction in Scope 1 and 2 emissions.
-
Waste Management:100% waste diversion from landfill, with recycling rates over 60% and a 23% reduction in food waste.
-
Warning! GuruFocus has detected 4 Warning Signs with FRA:MABB.
-
Is FRA:MABB fairly valued? Test your thesis with our free DCF calculator.
Release Date: May 21, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Mitchells & Butlers PLC ( FRA:MABB ) reported a strong first half with sales well ahead of the market, maintaining operating profits at GBP181 million despite cost headwinds.
-
The company achieved a like-for-like sales increase of 3.3% in the first half, driven mainly by food, with a particularly strong festive season.
-
Mitchells & Butlers PLC ( FRA:MABB ) has reduced its net debt to just under GBP750 million, about 1.6x EBITDA, excluding leases, and transformed its pension position to a GBP100 million asset.
-
The company is investing in new sites and capital projects, with a return on investment for its remodel program at a strong 33%.
-
Mitchells & Butlers PLC ( FRA:MABB ) continues to focus on sustainability, reducing its carbon footprint by 16% since 2019 and diverting 100% of waste from landfill.
Negative Points
-
The second quarter was impacted by poor weather and macroeconomic pressures, resulting in slower sales growth of 1.8% compared to the first quarter.
-
High costs, particularly in red meat and National Insurance contributions, have been significant headwinds, although partially mitigated.
-
The company faces challenges in maintaining margins due to ongoing cost inflation, with a forecasted GBP95 million cost increase next year.
-
Mitchells & Butlers PLC ( FRA:MABB ) is cautious about consumer confidence, noting potential impacts from geopolitical issues and economic conditions.
-
The company acknowledges the difficulty in reading underlying growth due to various external factors, including weather anomalies and shifting calendar dates.
Q & A Highlights
Q: Can you discuss the performance differences between the premium and value ends of your estate, and any geographical differences in trade? Also, with your NAV being significantly higher than the share price, are you considering selling non-core assets or buying back shares? A: Phil Urban, Chief Executive, explained that the performance split is more between wet-led and food-led businesses rather than premium versus value. London, with its wet-led businesses, has shown strong growth. Tim Jones, CFO, added that the Board continuously reviews capital allocation but will not sell assets or buy back shares if it undermines the group's strength. There will be some site disposals for operational reasons, but not for share buybacks.
Q: Regarding the recent trading slowdown, is it mainly due to weather, or are there signs of a weaker consumer? Also, how do you view larger scale acquisitions versus individual transactions? A: Phil Urban noted that while weather is a significant factor, consumer confidence is also affected by broader issues. However, on better weather days, sales have been strong, indicating underlying business strength. Regarding acquisitions, the company remains opportunistic but cautious about overpaying, focusing on individual transactions rather than large-scale acquisitions.
Q: With the step-up in site acquisitions, under which brands are these new sites being acquired? A: Phil Urban stated that recent acquisitions have been for brands like Miller & Carter and travel hubs. The company uses a property mapping tool to determine the best brand fit for new sites, and while they may convert sites to existing brands, they remain open to trading under existing badges if appropriate.
Q: Could you provide more details on CapEx and cost guidance for 2027, particularly regarding wages and utilities? A: Tim Jones explained that CapEx includes single site acquisitions, with an increase in maintenance CapEx due to investments in network and hosting. For 2027, they assume a measured approach to living wage increases and a small increase in utility costs, with 15% of energy secured.
Q: What like-for-like sales growth is needed to maintain or expand margins given the cost inflation guidance? A: Tim Jones indicated that while this year is challenging due to cost headwinds, margins should be flat or better next year, particularly benefiting from national insurance reductions. A like-for-like sales growth of around 3.9% is seen as the sweet spot for maintaining margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
