Mitchells & Butlers profits fall
Restaurant and pub group Mitchells & Butlers has reported a dip in profits as the rising cost of food and fuel undermined rising revenues.
The owner of chains including Harvester, All Bar One and O’Neills, which earlier this year faced a shareholder revolt over management and ownership issues, gave scant details on its search for a new chief executive and non-executive directors.
M&B, which runs around 1,600 restaurants and pubs across Britain, said its pre-tax profits for the 28 weeks to 7 April were £42m, 1 million pounds lower than a year ago.
M&B said 2.7 per cent growth in like-for-like sales at its ongoing business was helped by strong food sales.
But poor weather across the UK that kept Britons indoors in April pushed down like-for-like sales growth for the 33 weeks to 12 May to 2 per cent, the company said.
Overall revenues, including new stores, grew by 6.3 per cent to £969m, and the company said it was on track to open about 55 new or converted sites this year.
But earnings were hit as the high cost of food and fuel ate into profitability, M&B said.
Operating margins in its retained estate dropped 0.7 percentage points to 14.2 per cent.
The British pub industry has been hit hard in the last five years, buffeted by a smoking ban implemented in 2007, a recession that has thinned the wallets of UK consumers, and alcohol duties that have been rising above the rate of inflation since 2008.
Official data released last month showed Britain fell back into recession in 2012, and workers’ meagre wage growth has been eroded by rising prices.
M&B gave few details on any progress in its search for a new chief executive, which was reported to be down to a shortlist of three candidates in February.
“I am pleased with the progress being made to appoint a new CEO and further non-executive directors and look forward to being able to make an announcement at the appropriate time,” said Bob Ivell, the executive chairman.
At its annual meeting in January, 14.3 per cent of shareholders voted against the re-election of M&B’s only two non-executive directors who both represent its biggest shareholder Joe Lewis. Some are unhappy at Lewis’ influence and the lack of independent directors.
M&B said on Friday it would need to monitor cash flow and investment before resuming dividend payments, which it dropped in 2008 in order to pay down debt.