M&B cost pressures ease | Babcock | Diageo | Phoenix
Mitchells & Butlers
Pub and restaurant chain Mitchells & Butlers said it expects full-year earnings to be at the top end of expectations following a strong rise in sales and an easing of cost pressures.
The company said strong trading had continued through the fourth quarter, bringing year to date like-for-like sales growth to 9.1%, with total sales growth now of 10.5%.
“Cost headwinds are abating and remain at the bottom end of the range previously identified,” said the company in a trading update.
“We remain mindful of the challenging macroeconomic environment and pressures on the consumer however, 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 into FY 2024.”
Engineering and defence company Babcock has stuck to its guidance for higher organic revenue and improving margins this year, helped by progress in its shipbuilding and nuclear infrastructure contracts.
It said trading has been encouraging since the start of the financial year, with good organic revenue growth, improved operational performance and higher cash flow compared to the same period in the previous year.
“Overall, including the impact of contract phasing in Marine and further growth in Nuclear infrastructure programmes, organic revenue growth is offsetting the impact of disposals in the prior year,” it said.
“Underlying operating profit increased year-on-year, driven by revenue growth and continued operational improvement driving underlying operating margin expansion.
“Operating profit also benefitted from the earlier than anticipated receipt of initial licence fees associated with the Polish MIECZNIK frigate programme. Underlying operating cash flow in the period was higher than expected, largely due to contract phasing.
“New programme wins, contract renewals and progress on the group’s opportunity pipeline remain strong, supporting the board’s unchanged expectations for another year of organic revenue growth, further underlying margin expansion, improved free cash flow and progress towards the group’s medium-term guidance.”
New Diageo chief executive Debra Crew said expectations for the next year are unchanged from when the company reported its fiscal 23 preliminary results on 1 August.
“While we expect operating environment challenges to persist, with ongoing cost pressure and geopolitical and macroeconomic uncertainty, we will move with speed and agility and continue to invest in marketing and innovation.
“I am confident in the resilience of our business and our ability to navigate these headwinds while executing our strategic priorities.
“We remain well-positioned to deliver our medium-term guidance for fiscal 23 to fiscal 25 of organic net sales growth consistently in the range of 5% to 7% and organic operating profit growth sustainably in the range of 6% to 9%.
“I firmly believe the strength of our portfolio, our diversified footprint and our deep consumer insights will drive sustainable long-term growth and generate value for shareholders.”
Ms Crew succeeded Ivan Menezes who died in the summer.
Savings company Phoenix Group, which includes the Standard Life brand, posted a marginal rise in its half-yearly adjusted operating profit, driven by steady demand for its corporate pension scheme insurance.
Phoenix, which has historically specialised in managing books of life insurance businesses that are closed to new customers, reported an adjusted operating profit for the half year ended June 30 of £266 million, compared with £254m last time.
Glasgow-based shopping centre promotions company SpaceandPeople said its German subsidiary, POP Retail GmbH, has entered an agreement to provide retail kiosks and other services in managed shopping centres in Germany.
The agreement with with CEMAGG Management involves four shopping centres in Germany.
Nancy Cullen, CEO of SpaceandPeople, said the agreement helps to further expand and consolidate its network of venues in Germany.
The FTSE 100 closed 0.1%, or 8.63 points, higher at 7,601.85 as new data cast fresh doubt on the health of the property market.
Barratt Developments shed 7.6%, or 35.75p, to 432.75p. Taylor Wimpey lost 3%, or 3.5p, to close at 115p; and Crest Nicholson fell by 8%, or 14.75p, to 169.5p.
Prime Minister Rishi Sunak’s backing of Scotland’s oil industry, and the Rosebank oilfield in particular, continued to drive Ithaca Energy’s stock higher.
Ithaca, the oil and gas developer which has co-invested in the project alongside Equinor of Norway, enjoyed a continuing rally in its share price and its shares closed 3.4%, or 6p, higher at 183.5p.
Meanwhile, All Bar One pubs chain Mitchells & Butlers (see above) gained 4.3%, or 9.25p, to reach 223.75p after reporting a 9.1% rise in like-for-like sales for the year ending 23 September.