Toby Carvery owner Mitchells & Butlers posts soaring first-half profits
Pub company Mitchells & Butlers has seen a leap in profits as people continue to spend on going out.
The Toby Carvery and All Bar One owner saw pre-tax profits jumped by nearly a quarter to £134million in the 28 weeks ending 12 April.
In the same period, its operating profits rose by 10.4 per cent to £181million.
Its like-for-like turnover grew by 4.3 per cent, supported by bumper demand over Christmas, good weather in late March, and healthy trade on Mother's Day.
While food and drink volumes remained flat during the period, the company's overall revenue still increased by 4.5 per cent to £1.45billion.
Following the strong first half performance, it is now forecasting annual earnings towards the top end of expectations.
M&B said it continued to outperform the wider market by more than 3 per cent, primarily driven by higher restaurant sales.
The Birmingham-based business also credited the first-half result to 'disciplined cost control' and efficiencies.
M&B believes its full-year operating profit will be at the high end of current consensus forecasts even though it anticipates £100million of additional cost headwinds, mainly due to higher labour expenses.
Phil Urban, chief executive of M&B, said: 'Notwithstanding a likely increase in cost headwinds next year, we have confidence that relentless focus on delivery of our strategic priorities will generate further value.'
From early April, the National Living Wage rose 6.7 per cent to £12.21 per hour, while the minimum wage for 18-to-20-year-olds soared by 16.3 per cent to £10 per hour.
And National Insurance contributions on staff earnings went up from 13.8 per cent on wages above £9,100 per year to 15 per cent on salaries exceeding £5,000.
The hospitality sector has widely criticised the measures, warning they will lead to job losses, cancelled investment, and venue closures.
Julie Palmer, partner at Begbies Traynor, said: 'Mitchells & Butlers' impressive performance highlights how the larger players are proving resilient, even against a backdrop of higher costs and low consumer confidence across the leisure sector.'
'M&B's healthy sales growth stands in contrast to these factors, and suggests there is an underlying current of consumer confidence that these industries can ride.
'It is encouraging for the sector as a whole that people are still finding room in their household budgets to go out and enjoy a drink or a meal.'
Mitchells & Butlers shares were 2.9 per cent higher at 284p on Thursday morning, making them one of the FTSE 250's top risers.
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