Mitchells & Butlers plc

H1 operating profit was GBP 181 million, and EPS increased 3.6%. Like-for-like sales were up 3.3% for the half, with Q1 up 4.5% and Q2 up 1.8%. Management said they absorbed an incremental GBP 12 million of employers’ National Insurance, and that cost headwinds were slightly lower than the previously discussed GBP 130 million, with next-year cost inflation expected at GBP 95 million, or about 4% of the cost base. CapEx was GBP 117 million in H1 and is expected to be about GBP 230 million for the full year; net debt was just under GBP 750 million, or about 1.6x EBITDA excluding leases.

Phil Urban said the quarter was effectively a tale of two periods: a very strong Q1 and festive season, followed by a softer Q2 driven mainly by adverse weather and some macro pressure. He emphasized that guest metrics remain at all-time highs, brands are healthy, and the business is using Ignite, targeted promotions, labor optimization, and capital investment to push through a difficult environment. His tone was confident and forward-looking, with repeated comments that the macro backdrop is temporary and that the company is well positioned for the medium term.

Tim Jones framed the first half as strong trading in a tough cost environment, noting operating profit of GBP 181 million and EPS up 3.6% thanks to lower interest expense from degearing. He highlighted strong cash flow, CapEx of GBP 117 million, the purchase of 5 new sites in H1, the GBP 11 million final Pesto consideration, and the move to a derisked pension asset of about GBP 100 million; net debt ended just under GBP 750 million. Looking ahead, he said next-year cost inflation should be about GBP 95 million, with wages assumed at roughly 4% to 5%, utilities up about GBP 10 million, and the energy position only partially hedged, while full-year CapEx is expected around GBP 230 million.

Analysts pressed on whether softer trading reflected weaker consumers or just weather, and management said weather was the main driver, though they acknowledged it would be naive to ignore broader consumer and geopolitical uncertainty. On capital allocation, management said they will not sell good operating sites or use debt-funded buybacks/dividends just to reset the capital structure, though they continue to review options over time. Questions on efficiencies and margins drew a response that Ignite already delivers savings and that labor deployment changes alone could more than offset sales weakness if landed; they also said margins should be flat or better next year as cost headwinds ease.