Yahoo Finance Wagamama Owner Restaurant Group Reports Surge in H1 Core Earnings
By Scott Kanowsky
Investing.com -- Restaurant Group PLC (LON:RTN) posted a nearly four-fold rise in core income in the first half, as the Wagamama owner was boosted by the removal of pandemic-era restrictions that helped offset inflationary pressures.
The British chain of eateries reported adjusted earnings before interest, tax, depreciation, amortization and exceptional items of £41.7 million from £11.2 million during the same six-month period last year - an increase of more than 272%. The company noted that the "significant" uptick mainly stems from favorable comparables to the first 27 weeks of 2021, when COVID rules had a negative impact on performance.
Total revenue surged by 95% to £423.4 million. The subsequent rebound in customer demand, coupled with warm weather in the U.K. in July and August, strengthened sales at Restaurant Group's pubs division in particular.
However, when including exceptional items, the firm booked a pre-tax charge of £42.4 million, saying soaring prices and a darkening economic outlook have impaired some of its assets.
Utility costs are £2 million greater than the firm's previous guidance given in May 2022, Restaurant Group said, due to new openings and unhedged volumes on sites billed by landlords. It also specified that Thursday's update does not include the impact of any potential aid from the British government for the hospitality industry.
Shares in the group climbed in mid-day trading.
Analysts at Goodbody described the results as strong, but flagged that the outlook remains cloudy because of high energy prices and uncertainty around the effect soaring inflation may have on consumer spending.
“We await to see any moves from the U.K. government to protect the hospitality sector but note that risks to our forecasts remain skewed to the downside,” the analysts said in a note.
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