Mitchells & Butlers PLC (LSE:MAB) shares fell 8.7% after the pub and restaurant group reported flat underlying profits for the first half due to cost inflation, while sales growth slowed.
Adjusted operating profits for the owner of All Bar One, Harvester and Toby Carvery were unchanged at £181 million for the 28 weeks to 11 April. Statutory pre-tax profit rose 7% to £143 million.
Total revenue increased almost 3% to £1.49 billion, while like-for-like sales grew 3.3%.
Current trading has moderated, down from 4.5% in the first quarter to 1.8% in the second, and the most recent three weeks at 1.1%.
This was said to reflect tougher weather-led comparatives, macro pressure on discretionary spend and some tube-strike disruption.
Cash inflow before bond amortisation fell to £98 million from £131 million a year earlier.
Chief executive Phil Urban said the company had delivered “another robust performance” despite “significant inflationary cost challenges facing the sector”.
He said customer demand remained resilient and highlighted net debt excluding lease liabilities falling to £747 million from £860 million a year earlier.
The group said it remained focused on growing market share despite broader economic uncertainty, helped by investment in its Ignite programme and capital spending across the estate.
Broker Peel Hunt said: "Encouragingly, M&B continues to outperform the market as measured by the CGA Business Tracker."
Analysts also noted that cost inflation guidance has improved modestly, with headwinds now expected at around £120 million pre-mitigation, down from previous guidance of circa £130m, or roughly 5.5% of the cost base versus 6.0% previously.
As for the following year, management expects cost headwinds to normalise to circa £95 million, or about 4% of the cost base.