LONDON (ShareCast) - (Sharecast News) - Shares in Mitchells & Butlers surged on Friday as the pub group posted better-than-expected annual profits and kept cost impacts unchanged, despite rising pressures, adding that like for like sales in the last two months had risen by 3.8% amid uncertainty ahead of the UK government's Budget.
The upbeat performance came as the company reported a jump in full-year pre-tax profits to £238m from £199m. Group like for like sales in the year to September 27 rose 4.3% as the company became one of the first to provide a picture on the impact of last year's Budgetary increase in wage and employer tax levels.

On an adjusted basis, pre-tax profit came in at £246m, up from £211m a year earlier and beating expectations of £237.5m. Shares in the company were up almost 10% in early London trade.

M&B held expectations of £130m in cost headwinds for the current year before mitigation - or 6% of its cost base - driven by wage rises, further increases in tax thresholds, and higher food inflation.

"This includes our preliminary assessment of the impact of the ... recent Autumn Budget, pending clarification of further detail," the company said.

"We believe that our strong market position, together with the success of our Ignite improvement programme, should enable us to continue to outperform the sector and leave us well positioned to mitigate these increases."

Looking ahead, M&B said it expected LFL sales to outperform growth forecasts for the eating out market of 2.4% in fiscal 2026.

"After a slowdown in fourth quarter trading, markets should respond well today to news of a bounce back in the last eight weeks, with resilient like-for-like growth of 3.8%. Cost inflation guidance for this year was already high at 6% so there may be some relief that this remains unchanged in the wake of recent policy announcements with the shares up at the open," said Derren Nathan, head of equity research at Hargreaves Lansdown.

Reporting by Frank Prenesti for Sharecast.com

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