Mitchells & Butlers Plc · LSE:MAB
Mitchells & Butlers — FY2022 Earnings Presentation
30 slides from Mitchells & Butlers's earnings presentation, 2022
Slide 1: Full Year Results 2022
Mitchells P & Butlers A Bod ~ & Bu es <“. Full Year. Results 2022 ane
Slide 2: Introduction
Introduction • Delivered a robust performance within a challenging trading and macro environment • Sales recovery continuing with encouraging growth • Capital and Ignite programmes will deliver continued momentum • Remain focused on our strategic priorities –2–
Slide 3: Financial Review FY 2022
Financial Review FY 2022 Tim Jones Chief Financial Officer –3–
Slide 4: Income Statement (before adjusted items)
Income Statement (before adjusted items) –4–
Slide 5: Like-for-like sales vs. FY19
Like-for-like sales vs. FY19 • Food continued to perform better than drink over H2 despite VAT reduction expiring but drink recovering in recent months • Suburban and rural areas outperformed larger city centres in H1 with city centres recovering over H2 • FY22 sales driven by spend per head growth
Slide 6: Diverse portfolio of brands and locations
Diverse portfolio of brands and locations –6– Size of bubble based on brand sales
Slide 7: Adjusted EBIT movement vs. FY19
Adjusted EBIT movement vs. FY19 +£21m £(15)m +£82m £(70)m +£53m £(148)m FY 2019 FY 2019-21 FY 2022 Utilities Other cost Government Trading and FY 2022 £317m openings openings headwinds support efficiencies* £240m and and (labour, food (including VAT remodels remodels costs etc) benefit) *Trading and
Slide 8: Cost inflation to remain high and uncertain
Cost inflation to remain high and uncertain £m FY23 vs. FY22 Mitigation Historic norm • Anticipated cost headwinds before major mitigation activity on cost base of £1.8bn • FY23 inflation before mitigation expected to be c.10-12% but energy price volatility could have a material impact, especially i
Slide 9: Cashflow / debt
Mitchell & Cashflow / debt ‘& Butlers Serving with pride, since 1898 FY 2022 | FY 2021 £m £m Operating cash flow 380 195 Working capital movement 19 7 Pension deficit contributions (44) (52) Capital expenditure (122) (33) Lease principal and interest (61) (62) Net interest (99) (104) Tax and other (
Slide 10: Pensions update
Pensions update Triennial pension deficits • Triennial valuation as at 31 March 2022 - Agreement reached in principle, expected to sign shortly - Expected to show a significant improvement in funding position (2019: £293m deficit) - Ahead of trajectory to full funding • No impact anticipated from re
Slide 11: Summary
Summary • Sales recovery continuing with encouraging volume growth in first ten weeks of new financial year • Costs: - Inflation above trend especially in food, energy and labour but now across the supply chain - Outlook volatile and uncertain • Well placed to mitigate as many of the costs as we can
Slide 12: Phil Urban, Chief Executive Officer
Phil Urban Chief Executive Officer – 12 –
Slide 13: Reasons to be positive: 1. FY22 sales build
Reasons to be positive: 1. FY22 sales build (excluding VAT impact) • Gradual like-for-like sales build through all four quarters vs FY 2019, adjusting for the VAT benefit in H1 • Initially the food-led businesses and more suburban locations faired better than wet-led and city businesses, but as the
Slide 14: Reasons to be positive: 2. Our people
Reasons to be positive: 2. Our people • Staffing issues seen across the country as a direct result of losing people during furlough to other sectors and the absence of the EU talent pool • Especially acute across back of house roles • Focus on clear opportunities for career development and progressi
Slide 15: Reasons to be positive: 3. Guest review score improvement
Reasons to be positive: 3. Guest review score improvement • Encouraged by consistently strong guest feedback scores • Clear correlation between guest feedback and like-for-like sales growth – 15 –
Slide 16: Reasons to be positive: 4. Christmas opportunity
Reasons to be positive: 4. Christmas opportunity Q1 like-for-like sales vs. FY19 Omicron Variant • December FY 2022 was hugely impacted by the emergence of the Omicron variant and ‘stay at home’ messaging • Festive bookings for FY 2023 are solid and we are looking forward to people celebrating with
Slide 17: Macro challenges: Cost headwinds and mitigation
Macro challenges: Cost headwinds and mitigation Cost headwinds Mitigation Employment Ignite Capital programme Utilities Pricing Menu/offer Food and Drink development • Inflationary cost pressures continue to present a major challenge to the business • We have a proven track record of mitigation in p
Slide 18: Macro challenges: Consumer confidence and supply
Macro challenges: Consumer confidence and supply UK consumer confidence Dec 2021 – Nov 2022 Pub and restaurant closures since March 2020 - 9.9% GfK Consumer Confidence Index • Food-led venues have been hit harder by closures, with the number of outlets reducing by 12.0% since March 2020, with indepe
Slide 19: Our 3 strategic priorities
Our 3 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 -
Slide 20: 1st Lever – Strategic decisions: Pricing and Menu development
1st Lever – Strategic decisions: Pricing and Menu development • Menu development has been cognisant of the 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, moving prices on food and drink by c.5%, although
Slide 21: Impact - FY23 sales growth
Impact - FY23 sales growth • Like-for-like sales growth vs. FY22 for ten weeks since period end of 6.5%, equating to 11.1% adjusting for year-on-year VAT impact • Sales growth driven by volume growth across drink and food • Like-for-like sales increased 9.2% vs. FY19 • Strengthening wet trade in cit
Slide 22: Impact – FY23 trading vs. market
Impact – FY23 trading vs. market Rolling four-weekly average like-for-like sales vs Coffer Peach Tracker, vs. calendar year 2019 • Tracking ahead of the market on the Coffer Peach Tracker over first weeks of FY23 – 22 –
Slide 23: 2nd Lever: Capital programme
2nd Lever: Capital programme • Target reinvestment every 7 years • New investment template - Browns in suburbia. 2 sites now open (Browns Beaconsfield, Browns Ruislip) • Completed detail cost engineering to help offset project cost inflation – 23 – Browns Beaconsfield
Slide 24: 3rd Lever: Ignite – Selection of initiatives
3rd Lever: Ignite Selection of initiatives SALES COST REDUCTION Sales Culture Menu & Product Maintenance Process Takeaway Own Channel Cost Benchmarking Tables & Yield Management Delivery Digital Rewards Top 300 Dynamic Pricing Food and Drink Fraud Waste Guest Obsessed Energy Recycling Order at Table
Slide 25: Sustainability
Sustainability MAKING momenty MATTER Mitehetts©2) & Butlers Serving with pride, since 1898 oR COMMYy, / % cS) We are committed to reducing our emission, tackling waste and protecting biodiversity. We strive to deliver responsibly sourced products and menu options for everyone. TARGETS © BY 2040 SSNS
Slide 26: Summary
Summary • Delivered a robust performance within a challenging trading and macro environment • Sales recovery continuing with encouraging growth • Capital and Ignite programmes will deliver continued momentum • Remain focused on our strategic priorities – 26 –
Slide 27: Questions
Questions
Slide 28: Full Year Results 2022 Supplementary Slides
Full Year Results 2022 Supplementary Slides – 28 –
Slide 29: FY 2022 – Outlet reconciliation
FY 2022 – Outlet reconciliation Total Managed1 Franchised Total MAB Opening outlets (start FY 2022) 1,657 72 1,729 Transfers (5) 2 (3) Disposals (7) (2) (9) Acquisitions 1 - 1 Closing outlets (end FY 2022) 1,646 72 1,718 Notes: 1. FY 2022 closing managed total includes 10 non-trading sites. 2. Lodge
Slide 30: Creating equity value through deleverage
Creating equity value through deleverage • Progress in deleverage through securitisation amortisation and pensions deficit contributions • Over past six years net debt (excl. pensions and leases) reduced from £1,840m to £1,198m Note: Assumes consistent enterprise value and net debt 2016 Current +5 y