Pub shares lose fizz as inflation spike takes toll

ShareS in pub chains came under pressure after two of the country’s leading operators sounded the alarm over inflation.

Mitchells & Butlers, which owns around 1,500 pubs across the UK, said it expects to face soaring costs that ‘persist at or above current levels well into the next financial year’.

The owner of the harvester, Toby Carvery and Miller & Carter chains said sales were up just 0.9pc across the three months to July 16. and it said rising costs represented a ‘major challenge’ to the industry. Following the bleak update, broker Peel hunt slashed its target price to 260p from 310p.

Shares fell 0.4pc, or 0.6p, to 172p yesterday.

The mood across major publicans was much of the same.

In its aGM trading statement, Fuller’s boss Simon emeny said: ‘The industry-wide inflationary cost pressures around food supply, labour and particularly energy are showing little signs of abating.’

In the 16 weeks to July 16, Fuller’s said total sales were 3pc ahead of pre-Covid levels in 2019. and sales were up 27pc on 12 months earlier. Shares, however, bucked the trend of its rivals, rising 3.3pc, or 20p, at 630p.

elsewhere, the City Pub Group, which runs around 50 pubs in several UK cities, fell 1.3pc, or 1p, to 74.5p and Wetherspoons sank 0.6pc, or 3.5p, to 565p and Marston’s was down 0.7pc, or 0.34p, to 46.98p.

On the wider market, the FTSE 100 inched up 0.09pc, or 6.2 points, to 7270.51 and the FTSE 250 climbed 1.6pc, or 309.4 points, to 19,709.24.

Bathroom fitter Howden Joinery was among the biggest risers after hiking its guidance for the year.

The firm increased its capital expenditure forecast by £20m to £130m, including a one-off £10m cost for buying more land at its factory site.

In its half-year results, howden Joinery reported a 21.6pc increase in profits to £145m while revenue soared 16pc to £913.1m.

The company said it has enjoyed ‘good momentum’ entering the second half of the year, sending shares up 4.2pc, or 26.6p, to 655.6p yesterday.

In the second tier, shares in IG Group soared 10.1pc, or 71.5p, to 783p after a strong set of results.

The online trading platform said profits rose to £477m in the year to the end of May compared with £446m in 2021.

In news that will cheer investors, IG Group’s proposed full-year dividend of 44.2p per share is up on the 43.2p per share paid out last year.

The firm also began the first half of its £150m share buyback programme which is scheduled to be completed next year. Investment group AJ Bell, meanwhile, hailed its ability to attract new customers despite weakened investor sentiment over the past six months. Customer numbers rose by 14,120 or 4pc in the three months to the end of June.

This came despite its assets under administration falling 5pc to £63.5bn in the quarter due to ‘ adverse market movements’. Shares inched up 4.4pc, or 12.6p, to 300p.

Moneysupermarket shares surged 12.9pc, or 24.7p, to 216.8p as its reported a 10pc rise in halfyear profits to £56.6m and said figures for the full year would be at the upper end of City forecasts.

revenue rose 19pc to £193.2m for the six months to the end of June. With the cost of living crunch continuing to bite, the firm said it will hand staff on salaries below £55,000 a one-off payment of £2,000 in September.

Dechra Pharmaceuticals fell 3pc, or 112p, to 3618p after the animal medicine maker placed shares at a discounted price. Dechra said it raised £180m having placed more than 5m shares at 3430p.