M&B cautious as squeeze on consumer spending continues
BIRMINGHAM-based pubco Mitchells & Butlers has said it is cautious about growth prospects due to the ongoing squeeze on discretionary spend.
The group said in its interim results today that in the five weeks since the half-year end like-for-like sales had increased just 1%.
“For some time to come, we expect consumer confidence and discretionary income growth to remain subdued. Consumers in lower income deciles are likely to continue to be more stretched than more affluent groups and London and the South East are likely to remain the main geographic drivers of economic growth,” it said.
“We are confident in our ability to grow further in the future as a result of our broad brand portfolio, high quality assets and the transformation of our operations and culture.”
The half-year results show revenue increased 2.3% to £991m as a result of modest growth in like-for-like sales together with the contribution from new restaurants and pubs. Revenue growth was driven principally by food sales which comprise 51% of total sales and were up 4.5% in the period. Drink sales were marginally higher than last year.
Adjusted operating profit of £145m was 5.1% higher than last year. During the period the business continued to invest in improving levels of service and amenity, spending £4m more than last year on a like-for-like basis on outlet level labour and repairs. Offsetting this investment was the remaining £4m of cost savings announced a year ago from restructuring the central support functions and IT systems, which have now been delivered in full. Pre-tax profit came in at £72m (H1 2012: £42m).
Overall, operating margins were 40 basis points higher than H1 2012 at 14.6% with the group saying benefits from the restructuring, menu management and lower new site opening costs offsetting the impact of alcohol duty increases from 2012 and higher costs from increases to the national minimum wage, food inflation and higher business rates.
Adjusted earnings per share for the period were 14.6p, 17% higher than last year. Basic earnings per share were 14.1p (H1 2012: 8.8p).
Alistair Darby, Chief Executive, said: “These results demonstrate the progress we are making through our business change programme. We are growing sales and profit in a tough market by building on the firm foundations of our excellent estate, strong brands, dedicated people and substantial scale.
“Having now delivered our restructuring cost savings in full, we have identified specific market segments where we can grow successfully and we have outlined clear operational priorities. By focusing on these areas, I believe that we will provide great experiences for our guests and sustainable returns for our shareholders.”
The company also announced the appointment of Stewart Gilliland as an independent non-executive director of the company with immediate effect.
Mr Gilliland was Chief Executive Officer of Muller Dairy (UK) Ltd until 2011 and prior to that held senior management positions in InBev, Interbrew UK and Whitbread plc. He is currently a non-executive director of Booker Group plc, Sutton and East Surrey Water Co, Tulip Group Limited, Nature’s Way Foods, C&C Group and Vianet plc.
M&B chairman Bob Ivell said: “I am delighted to welcome Stewart to our board. He brings significant and valuable experience and we are sure that he will be an asset to the company. Stewart’s appointment, along with the appointments of Imelda Walsh and Colin Rutherford, means that the board now comprises a non-executive chairman, three independent non-executive directors, three non-executive directors appointed as representatives by specific shareholders and two executive directors.”
M&B is the UK’s largest operator of managed restaurants and pubs. Its portfolio of brands and formats includes Harvester, Toby Carvery, Vintage Inns, Premium Country Dining Group, Crown Carveries, Village Pub & Kitchen, Sizzling Pubs, All Bar One, Browns, Miller & Carter, Metro Professionals, Alex, Nicholson’s, O’Neill’s and Ember Inns.
