Pub and restaurant owner Mitchells & Butlers PLC is expected to report a 5% decline in half-year pre-tax profit to £78mln on Wednesday, reflecting higher costs related to wage rises and a weaker pound.
The company has warned that profits this year would be hit by increase in costs following a slump in the pound after the Brexit vote last June and an increase in the minimum wage.
At its full year results in November, the group’s chief executive, Phil Urban, said: “We are working hard to mitigate these head-winds wherever possible, both through building on our sales momentum and active management of our cost base.”
Analysts forecast gross margins will drop 80 basis points in the half year due to a 3.5% increase in cost inflation. For the fiscal year 2017, total costs are expected to rise £56mln.
Mitchells, which owns Toby Carvery, Harvester and All Bar One, has also been battling increased competition in the restaurant sector following a wave of new openings in the UK. Last year the firm spent £167mln on opening eight sites and remodelling a further 252 pubs and restaurants.
Estate agents Foxtons Group PLC (LON:FOX) holds its annual general meeting in a no doubt “well appointed” venue, and will update shareholders on current trading.
Peel Hunt is not expecting the group to report much change in the underlying market conditions since it published its full-year results back in March.
Back then, it said should current sales activity continue through the remainder of this year, it is likely that 2017 sales volumes will be below last year.
“Downward pressure on house prices in the capital won't be helping the top line and we await the conclusions of the Government's consultation on a lettings fee ban in the coming months. We expect a ban of some sort and while it may not come into force until 2018, we note that c£3m of profit is currently generated from lettings fees at Foxtons,” Peel Hunt noted.
The profit from lettings is more than 20% of group profits, so a lettings fee ban would hurt Foxtons in the wallet.
It is likely that transaction volumes in London will have remained sluggish, though the comparatives should start to get easier to beat as this time year there was a bit of uncertainty hanging over the June 23 Brexit vote.
Significant announcements expected
Interims: Brewin Dolphin Holdings PLC (LON:BRW); Countryside Properties PLC (LON:CSP); Mitchells & Butlers PLC (LON:MAB); Patisserie Holdings PLC (LON:CAKE); Redx Pharma Plc (LON:REDX)
Finals: British Land Co PLC (LON:BLND); C&C Group PLC (LON:CCR); JZ Capital Partners Ltd (LON:JZCP); SSE plc (LON:SSE)
AGM / EGM: BP PLC (LON:BP.); Cenkos Securities PLC (LON:CNKS); esure Group PLC (LON:ESUR); Foxtons Group PLC (LON:FOXT), UBM PLC (LON:UBM)
Trading Statement: Coats Group PLC (LON:COA); Premier Oil PLC (LON:PMO)