Pub chains suffer a chill as Beast from East bites
PUB stocks tumbled as the Beast from the East hammered first-half results and added to a string of challenges.
Mitchells & Butlers and Marston’s both slid after announcing that the cold snap in February and March hit sales to the tune of around £15m combined.
Mitchells, which owns All Bar One, lost around £12m in sales due to the weather and revealed an 8pc fall in profits to £69m.
Costs for staff, business rates and energy also took their toll on the firm. Its shares plunged 7.2pc, or 19.8p, to 255.4p.
Marston’s said the weather cost it £3m as families stayed at home. However, that mostly fell on its destination and premium pubs (falling 1.8pc) and was offset by a 2.9pc sales rise at its taverns.
Underlying profits at the firm, which owns the Pitcher & Piano chain and recently snapped up Charles Wells, rose 8pc to £36.3m. But it swung to a £13.4m statutory loss after writedowns.
Chief executive Ralph Findlay, 57, said he was encouraged by figures this week showing wages outstripping inflation. Sales in gin have soared by more than 50pc and non-alcoholic drinks are also on the up.
N+1 Singer recommend the stock, saying it stands out. Investors were unconvinced, however, amid concerns about the rough trading environment pushing up staff costs and the sugar tax. Marston’s shares fell 12.23pc, or 13.7p, to 98.3p.
Rival Greene King was dragged down too, with shares falling 2.1pc, or 11.8p, to 546.6p.
The FTSE 100 ended the day 11.22 points up at 7734.20.
Utility stocks also took a hit yesterday, after an ominous note on British Gas owner Centrica from Morgan Stanley. The bank’s analysts said they were ‘incrementally more negative on UK residential supply’ due to the looming price cap and tougher competition.
They said a recent meeting with the UK energy secretary Greg Clark and their breakdown of current tariffs led them to be ‘more wary’ of the impending cap.
It has been a gloomy week for Centrica – on Monday it said it lost 110,000 energy accounts in the first four months of the year.
The firm’s £1.7m boss Iain Conn then faced the wrath of investors at its annual general meeting on that day over the share price, which has slumped around 50pc over the past four years.
The investors will not have been encouraged by reaction to Morgan Stanley’s note. Shares dipped 5.1pc, or 7.5p, to 140.9p. Rival SSE fell 0.7pc, or 9.5p, to 1390p.
At the other end of the energy market, Horsham start-up Ceres
Power, tipped by this reporter at the start of the year, had a better day. The AIM-listed firm hopes to shake up the world’s energy provision with its hydrogen fuel cells to heat homes and power cars.
Yesterday it inked a major partnership deal with Chinese car and equipment maker Weichai Power.
The companies plan to work together on fuel cells to help electric buses in China run for longer.
Weichai could also invest up to £40m in Ceres as part of the deal. Ceres boss Phil Caldwell deemed it a key milestone. Shares rose 7.81pc, or 1p, to 13.8p. Platinum and chrome miner
Tharisa also got a bump after it emerged as an early mover into Zimbabwe’s mining renaissance following the ousting of dictator Robert Mugabe. It has bought a 90pc stake in the promising Salene Chrome Zimbabwe, for an undisclosed sum. It plans to spend around £2.3m scoping out the project over the next year.
Zimbabwe is promising favourable terms to miners as it tries to reboot its economy. Analysts backed the move, and the shares climbed by 1pc, or 1p, to 105p.