Mitchells & Butlers PLC (LON:MAB) shares frothed up on Thursday as the pub chain reported a rise in first-half sales and profits.
Revenue rose 5% to £1.19bn in the six months ended (H1 18: £1.13bn) 13 April, driven largely by like-for-like sales growth of 4.1%.
READ: Sales are booming Britain's pubs, but soaring costs are keeping a top on profits
Converting top-line growth into higher profits has proved challenging for pubs of late, given soaring tax bills and staff costs.
But M&B’s first-half pre-tax profit surged by almost 9% to £75mln (H1 18: £69mln) as margins widened to 12.7% (H1 18: 12.5%).
Shares were up 4.3% to 253p in early deals on Thursday, taking the company towards the top of the FTSE 250.
The improved profitability was partly down to a new piece of software that helps landlords manage their staff better, making sure the right number of workers are on the rota for the day and time. Still, overall costs were £24mln higher year-on-year.
M&B also said it got a £5mln bottom-line boost from the absence of the ‘Beast from the East’ this time around.
Steady start to H2 as well
“This is a strong set of results, demonstrating that we continue to build momentum in the business, delivering sales growth, sustained market outperformance and a return to operating profit growth all while reducing leverage to below four times,” said chief executive Phil Urban.
“This strong performance comes from the progress we continue to make in our three priority areas: building a more balanced business; instilling a more commercial culture; and driving an innovation agenda.”
Looking ahead, M&B said it expects the market to “remain tough”, although it is “confident in [its] ability to out-perform”.
Like-for-like sales growth has tailed off slightly in the opening few weeks of the second half, although they are still up 3.8% for the year so far.