UK: Mitchells & Butlers swings back to black in FY
- Full-year net profits reach GBP125m (US$195.6m), versus losses of GBP84m a year ago
- Net sales drop by 9.3% to GBP1.8bn on pub disposals
- Operating profits leap to GBP275m, from GBP33m last year
- Retained pub business sees sales rise but group warns of challenging times
Mitchells & Butlers has returned to profits in its latest fiscal year, but trading remains under pressure from a weak economy, food inflation and duty tax rises.
Net profits for the 12 months to 24 September reached GBP125m (US$195.6m), restoring Mitchells & Butlers (M&B) to the black following losses of GBP84m in the previous year. Lower one-off charges related to underperforming pubs helped the group out of the red.
The results helped M&B argue that its smaller scale is paying off in what remains a challenging environment for the UK on-trade. “This is a resilient set of results despite a challenging year with a difficult consumer environment, board changes and a takeover approach," said the group's executive chairman, Bob Ivell.
A stronger focus on pubs that serve food has also improved performance. "Food is our largest selling product, having grown by 30% over the last four years, and this has helped generate a 16% rise in profits per site over the same period," Ivell said.
In 2010, M&B sold off 330 so-called drinks-led pubs to Stonegate Pub Co for GBP373m. Its move came as other major pub companies also looked to streamline their estates. This year, Punch Taverns spun-off its managed pub business and pledged to cut its remaining tenanted pub estate by half within six years.
For its most recent fiscal year, M&B said that its retained pub estate increased net sales by 5%. Operating profits rose by 1.1% on the same basis. If pubs disposed of in 2010 are added back to the mix, M&B's total group net sales fell by 9.3%, to GBP1.8bn, for its most recent fiscal year. The decline was a direct result of the firm's smaller estate. Group operating profits, meanwhile, hit GBP275m in the most recent year, versus GBP33m in a previous year hit by one-off charges.
Despite the progress made, the firm said that it continues to see challenges. "We expect inflationary cost pressures to persist in the new financial year, especially from energy, duty and food," said the group, which is also searching for a new CEO.
For the company announcement, click here.
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