Mitchells & Butlers toasts sunny weather as sales fizz

Pub group Mitchells & Butlers served up some strong trading numbers for its third quarter, with total and like-for-like sales growth both accelerating amid the recent warm weather.

Over the 10 weeks to 22 July, like-for-like sales grew 2.6%, a step up from the 1.6% in the first half of the year and the 1.9% in the first 33 weeks of year.

Taking account of the 13 new sites and 224 conversions and remodels completed in the 43 weeks of the financial year to date, total sales have increased by 3.1%.

LFL sales are up 2.0% for the year to date, with food up 1.4% and drink up 2.7%.

The FTSE 250 company reiterated that increased cost pressure was expected to lead to full year margins being lower than last year.

Chief executive Phil Urban was encouraged by the sales performance since the half-year, acknowledging the help from the sunny weather but also noting that M&B continued to outperform the market.

"The cost headwinds we face remain challenging," he said. "However, we are working hard to mitigate these where we can and we are confident that continued focus on the three strategic priority areas we have identified will help us to deliver a performance for the full year in line with the board's expectations and will generate long term sustainable shareholder value."

The company has also now reached agreement on its 2016 triennial pensions valuation with trustees, where the agreed deficit of £451m as at 31 March 2016, up from £572m in 2013, will be funded to 2023 by an unchanged level of cash contributions of £46m per year, indexed, as per the agreement reached in 2013.

In 2024 an additional payment of £13m will be made into escrow, the company said, should such further funding be required at that time.