The Week Ahead: Figures due from Thomas Cook, Mitchells & Butlers and Marston’s
- Credit: PA
Thomas Cook will this week detail the costs of a series of terror attacks in the Middle East and Europe across its business while the City will study annual results from pub groups Mitchells & Butlers and Marston’s.
Holiday firm Thomas Cook is expected to see profits fall when it posts its annual results on Wednesday, buffeted by terrorist attacks in Tunisia, Egypt and Paris.
The City expects it to report underlying earnings down 5% to £307million, with rising summer bookings offset by growing geopolitical tension.
Analysts at Jefferies add that the closing of the airport at Sharm el-Sheikh in Egypt after the downing of a Russian passenger carrier last month will cost the travel firm £5m, with the Tunisian beach and hotel attacks in June costing it a similar sum.
The Paris attacks this month will fall outside of the reporting period, but investors will want to hear from chief executive Peter Fankhauser on the effect on current trading.
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Mr Fankhauser succeeded former boss Harriet Green in a surprise announcement a year ago. Ms Green inherited a business in 2012 that was on the brink of collapse and cut costs and purged low-margin operations to restore the firm. However, critics of Ms Green, who was recruited from technology distributor Premier Farnell, said she did not understand the travel business well enough to grow the business.
In a September trading update, the group said its holidays were 95% sold for the summer season in Britain, 1% ahead of the same period in 2014. However, average selling prices were 1% lower, due to an increase in the proportion of “seat only” sales rather than packages.
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Earlier this month, a report found Thomas Cook had prioritised cost cutting over customers and still needed to address safety issues nine years after two children died from carbon monoxide poisoning at a hotel booked through the company.
Bobby and Christi Shepherd, aged six and seven, died in 2006 as a result of a faulty boiler at a bungalow attached to the Louis Corcyra Beach hotel on Corfu. Thomas Cook was slow to respond to their deaths and was insensitive in its dealings with their parents, said the report commissioned by Thomas Cook and overseen by former Sainsbury’s boss Justin King.
The new boss at Mitchells & Butlers is expected to post a rise in annual profit on Tuesday. The City expects the pub group to lift full-year pre-tax profit by 10.8% to £190.7m, with it having already reported a 1% like-for-like sales rise for the first 50 weeks of the year.
Investors will get a look at new chief executive Phil Urban, who replaced Alistair Darby in September after a washout summer prompted it to warn over profits. The business, which owns more than 1,800 pubs, said like-for-like sales fell to 0.7% in the seven weeks to September 12 after a wet summer led to slowdown in growth.
Mr Urban joined the company as chief operating officer in January from Grosvenor Casinos and previously ran Whitbread’s pub restaurants division. Mr Darby left the business after three years in the role, having been appointed chief executive in October 2012.
Analysts at Goodbody said they will look for more positive sales over recent weeks aided by the Rugby World Cup and the high proportion of the group’s estate based in London.
Investors will want to know how Mr Urban will manage the introduction of the living wage after Chancellor George Osborne said in July he would raise the country’s hourly minimum wage from April next year to £7.20 for over 25s, from its current level of £6.50, and to at least £9 an hour by 2020.
However, the business is in good shape ahead the introduction of Government legislation next June that allows tenanted pub landlords to break the link with their pub group, leaving them free them to search for more competitive beer contracts.
The vast majority of the group’s pubs are managed and owned by the chain, which means that, unlike some rival firms, it will have little to do to prepare for the change.
Marston’s is expected to report higher full-year sales on Thursday as it continues to build larger pubs that serve food and cater for families.
The City forecasts the firm, which operates 1,600 pubs, to post annual pre-tax profits up 10% to £91.5m, after opening 25 new pub restaurants last year.
The firm added in a full-year update last month that like-for-like sales at its premium pubs lifted 1.8% compared to 12 months ago, while like-for-like food revenues lifted 1.7% over the same period. The business said its beer brands performed well rising 5% compared to the same period year ago.
It plans to build another 20 premium pubs next year, adding it has largely completed its sell-off of pubs that cannot comfortably be converted to serve food.
Earlier this month, the country’s largest pub group, Enterprise Inns, posted flat annual profits after selling off hundreds of sites in preparation for the end tied pubs.