Mitchells & Butlers Plc · LSE:MAB
Mitchells & Butlers — HY 2023 Earnings Presentation
27 slides from Mitchells & Butlers's earnings presentation, 2023
Slide 1: Half Year Results 2023
of A OE oO OO, ing with pride, since 1898 ~ if a 3 4 sett Half Year Result 23
Slide 2: Introduction
Introduction • Delivered a strong first half performance in a challenging trading and macro environment • Market-beating like-for-like sales growth of 8.5%, with record guest review scores • Medium-term cost outlook is improving • Capital and Ignite programmes delivering continued momentum • Remain
Slide 3: Financial Review HY 2023 - Tim Jones, CFO
Financial Review HY 2023 Tim Jones Chief Financial Officer
Slide 4: Income Statement (before adjusted items)
Income Statement (before adjusted items) –4– Note: HY 2022 includes £53m of government support (primarily reduced rate of VAT on food and non-alcoholic drink sales)
Slide 5: Like-for-like sales vs. FY22
Like-for-like sales vs. FY22 • First half like-for-like sales growth of 8.5% (12.8% excluding last year VAT benefit) • Sales driven by both volume and price growth • London outperforming the rest of the UK with further return to office working and foreign tourism –5–
Slide 6: Diverse portfolio of brands and locations
Diverse portfolio of brands and locations Bubble sizes are based on FY22 sales • The M&B brands cover a wide range of occasions, locations and price points –6–
Slide 7: Adjusted EBIT movement vs. H1 FY22
Adjusted EBIT movement vs. H1 FY22 150 100 50 £m 0 (50) HY LY Utilities Other cost H1 FY23 FY22 Sales Efficiencies Sales HY 2022 Government headwinds openings openings (spend per (volume)* 2023 support (labour, and and head) (including food costs remodels remodels VAT benefit) etc) *Sales (volume) i
Slide 8: Reduction in cost pressures anticipated in FY24
Reduction in cost pressures anticipated in FY24 • Cost pressures in FY23 anticipated at lower end of 10-12% range previously advised • Pressures expected to abate in FY24 although outlook remains uncertain • As at end of April, c.87% of FY23 energy requirements purchased and c.13% of FY24 –8–
Slide 9: Cashflow and debt management
Cashflow and debt management • Working capital inflow (includes receipt of Rank claim) • Pension contributions to cease by September 2023 • Strong and growing capital investment programme • Further reduction in net debt –9–
Slide 10: Summary
Summary • Strong sales performance with encouraging volume growth in first half • Good progress on cost mitigation. Inflationary headwinds anticipated to abate next year • Confidence in tracking ahead of management’s expectations in short and medium term • Well placed to manage uncertainty ahead: -
Slide 11: Phil Urban, Chief Executive Officer
Phil Urban Chief Executive Officer
Slide 12: Trading vs. market
Trading vs. market • Outperformance of the market strengthened further once Coffer Peach tracker started to compare to 2022 from January 23 onwards • Focusing on providing fantastic guest experience and value for money to build market share – 12 –
Slide 13: Recent trading
Recent trading • Strong like-for-like sales growth over the last six weeks of 8.9%, which includes Easter in both periods • Volume and spend per head growth on both food and drink • Outperformance of the market continued – 13 –
Slide 14: Consumer confidence and disposable incomes
Consumer confidence and disposable incomes ONS household real disposable income GfK UK consumer confidence (quarter on quarter growth, seasonally adjusted) • Guests have protected their out of home spending on food and drink, despite the cost-of-living squeeze • As inflation falls and real wage grow
Slide 15: Supply
Supply Total number of licensed outlets since December 2018 Covid supply contraction Cost-of-living supply contraction Source: CGA Outlet Index • Opportunity to gain market share through superior customer experience – 15 –
Slide 16: Guest sentiment
Guest sentiment M&B vs. Market - Net Sentiment Net Sentiment = % Positive Reviews (5*) minus % Negative Reviews (1-3*) on Trip Advisor and Google • Outperforming the market on net sentiment score • Clear correlation between guest feedback and like-for-like sales growth – 16 –
Slide 17: Our strategic priorities
Our strategic priorities Build a more Instil a more Drive an balanced business commercial culture innovation agenda - Brand propositions - Guest-driven decisions - Build on technology investment - Conversion to successful formats - Profitable sales - Digital marketing - Upgraded amenity in core - Co
Slide 18: Cost headwinds and mitigation
Cost headwinds and mitigation Cost headwinds Mitigation Employment 1: Pricing & offer development, operational controls Utilities 2: Capital programme Food and Drink 3: Ignite • Inflationary cost pressures continue to present a major challenge to the business, although the medium-term cost outlook i
Slide 19: Level 1: Pricing & offer development
Level 1: Pricing & offer development • Menu development cognisant of high food cost inflation • Most brands have a menu change in the Autumn and again in the Spring • Taken more price than we have traditionally although protecting entry level items where we can and introducing more premium items • G
Slide 20: Lever 1: Operational controls – Labour
Lever 1: Operational controls – Labour • Our team are our most valuable asset. Our new auto-scheduling tool helps us get the right people on, at the right time, delighting guests and driving sales – 20 –
Slide 21: Lever 1: Operational controls - Energy consumption
Lever 1: Operational controls - Energy consumption • Pub energy consumption is reducing each year as we implement improved operational practices alongside innovative technological solutions – 21 –
Slide 22: Lever 2: Capital programme
Lever 2: Capital programme • Strong returns post-investment • New investment template - Browns in suburbia. 2 sites open (Browns Beaconsfield, Browns Ruislip) • Secondary space utilisation - Arrowsmiths – 2 sites open (O’Neill’s Solihull, O’Neill’s Watford) Browns Beaconsfield Arrowsmiths – O’Neill’
Slide 23: Ego acquisition
Ego acquisition • In June 2023, we will exercise our option to acquire the remaining shares in 3Sixty Restaurants Limited, owners of Ego • Held a 40% stake since August 2018 • 26 sites (including 16 leased from M&B) • Existing team will continue to lead the business through its next phase of growth
Slide 24: Lever 3: Ignite - selection of initiatives
Lever 3: Ignite - selection of initiatives SALES COST REDUCTION Sales Culture Takeaway Menu & Product Maintenance Process Tables & Yield Management Own Channel Cost Benchmarking Delivery Digital Rewards Opportunity Sites Dynamic Pricing Fraud Food and Drink Waste Guest Obsessed Energy External Space
Slide 25: Sustainability – key initiatives
Sustainability – key initiatives Decarbonisation of the Estate Energy Ambassadors Sustainable Estate Practices Electric kitchens, air source heat A network in place to support Kitchen equipment & furniture pumps, voltage optimisers behavioural change recycling, roof & pipework insulation, glazing &
Slide 26: Summary
Summary • Delivered a strong first half performance in a challenging trading and macro environment • Market-beating like-for-like sales growth of 8.5%, with record guest review scores • Medium-term cost outlook is improving • Capital and Ignite programmes delivering continued momentum • Remain focus
Slide 27: Questions
Questions