- First half sales up 22%
- Like-for-like sales growth ahead of market
- Management confident of meeting full year profit target
Fast casual Mexican restaurant operator Tortilla Mexican Grill (MEX:AIM) served-up a resilient first half and expressed confidence in achieving its full-year profit targets.
Investors seemed unimpressed, however, with the shares dipping 0.4% to 69p in early trading. Over the last year the shares have lost just under a third of their value.
HOW DID THE BUSINESS PERFORM?
Sales for the 26 weeks to 2 July increased 22% to £32.7 million driven by like-for-like sales growth of 5%, ahead of the CGA Peach Coffer Tracker benchmark and up 8.4% on a VAT-adjusted basis.
Three new sites were opened in the period and two in the second half at Belfast and Bracknell, both of which were said to be trading well, and three further sites are expected to open taking the total to eight new outlets for the year.
Adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) came in at £1.8 million compared with £2.5 million in the same period last year. Excluding £1.1 million of government support, EBITDA grew 28.5%.
Despite uninspiring summer weather and ongoing rail strikes, the group continued to deliver like-for-like sales growth. In addition, self-help actions to improve supply chain and energy efficiency should add 1.3% to adjusted EBITDA margins in the second half.
‘We remain confident of being broadly in line with our targeted adjusted EBITDA for 2023 and we expect to see the full-year benefit of these initiatives next year,’ the company said.
CONTINUED ROLL-OUT
The company noted a ‘favourable’ commercial property market with rent as a percentage of revenue improving further. The UK roll-out is expected to continue at a rate of eight to 12 company-owned sites per year from 2024.
The group remains on track to exceed 95 sites by 2026 as predicted at its IPO (initial public offering), while management is assessing European expansion opportunities via acquisitions or franchising.
EXPERT VIEW
Analysts at Liberum maintained their full-year 2023 EBITDA forecast of £5 million with £7 million earmarked for 2024. Looking further out, the team sees scope for the firm to increase EBITDA margins to above 10% driven by increased scale and associated efficiency gains.
LEARN MORE ABOUT TORTILLA MEXICAN GRILL
