Restaurant Group returns to profit after strong first half

The owner of Wagamama and the Brunning & Price pub chain said revenues rose 10% in the 26 weeks to 2 July, to £467.4m, while adjusted earnings before interest, tax, depreciation and amortisation increased 15% to £36.3m.

Operating profits came in at £19.6m, compared to a £12.2m loss a year previously, while pre-tax profits were £2.3m. A year earlier, TRG posted a pre-tax loss of £28.5m.

The group attributed the increased profit to "strong trading performance, good cost control and lower exceptional costs", while its concessions had benefited from a resurgence in UK air travel.

It also supported a "moderate increase" in management’s expectations for full-year adjusted EBITDA.

Andy Hornby, chief executive, said: "We are encouraged by the significant progress made in the first eight months of the year, delivering strong LFL sales growth despite the consumer backdrop.

"We are making excellent progress on our medium-term plan and the board continues to actively explore strategic options to further accelerate margin accreditation and deleveraging."

Shore Capital, which has a ‘buy’ rating on the stock, increased its full-year EBITDA estimate by £2m to £80.5m following the results.

It said: "The first-half results demonstrated continued trading momentum, enhanced disclosure and significant progress against its medium-term targets, which would see EBITDA build towards £130m.

"We do not believe that this is being reflected in the current valuation."