Three things you need to know as the UK financial markets open, from Tony Cross.
#1. Profits soar at easyJet
Full year numbers are out from easyJet LON:EZJ this morning with a 34% increase in profitability following another record summer season. The holidays division performed even better, with a contribution of £190m pre-tax profit, up 56% YoY, whilst the marked uplift in per seat profits is seeing the company close in on its £7-£10 target. Available Seat Kilometres (ASK) will grow 8% in the new financial year as a result of longer average sectors and the outlook is optimistic despite a reduction in planned aircraft deliveries in the mid-term.
#2. Pets at Home retail sales struggling in rough environment
Interim numbers from Pets at Home LON:PETS are out today with management reporting a broadly subdued market, but it being one that they still managed to overachieve in. Whilst the Vets business continues to fare well using a unique model, pet retail is struggling and this is expected to continue through to the second half of the year although there’s a belief the situation will normalise in the longer term.
Total group revenue was up 1.9%, gross margins are flat and the profit outlook for the full year is being lowered, now expected to be up only modestly from FY24. Wage changes announced in the budget will add around £18m to costs.
#3. Will significant margin growth give investors in M&B cause for cheer?
Bar operator Mitchells & Butlers LON:MAB has full year numbers out, with the company noting a strong trading performance and like for like sales up 5.3%. Operating profits surged by more than 40% whilst operating margins improved 300bps to 12%. Management note the company is outperforming the wider market, but as FY25 gets underway, growth rates are normalising and whilst this needs to be seen in the context of easing inflation, there’s also the overhang of rising wages, meaning that the focus on cost efficiencies will need to be sustained.
