Three things you need to know as the UK financial markets open, from Tony Cross.
#1. Impact of slowing sales growth offset by falling costs at M&B
Bar and restaurant operator Mitchells & Butler LON:MAB has this morning published a pre-close trading update for the 51 weeks to 21st September. Like for like sales are up by 5.2% although there was a meaningful bias with performance significantly stronger at the start of the trading period, more so than was seen in the equivalent numbers posted a year ago.
The note does however add that costs are now falling with lower energy and food prices offsetting higher wage bills. As such there’s confidence that the full year numbers will be at the upper end of consensus expectations.
#2. Falling borrowing costs benefitting Pennon
Pennon LON:PNN has a trading statement out ahead of interims which will be published in a couple of months’ time. Most of the information here is a recap of milestones from the last few months but there is a financial outlook noting the expectation of lower costs and reduced customer demand in the second half of the year.
Group capital expenditure will continue at the YTD run rate, although financing costs have increased reflective of the accelerated investment program. Notably, the effective interest rate is lower.
#3. Ongoing consumer caution weighing at Diageo
Brewer Diageo LON:DGE has published a trading commentary ahead of its AGM noting that expectations are unchanged from where they were following the publication of full year results in the summer. Noting the ongoing theme of consumer caution, management add that they are making good progress in relation to strategic initiatives including a restructuring of operations in Nigeria. There’s also optimism that once the consumer economy does recover, Diageo will be well positioned to outperform the market.
