Mitchells & Butlers FY profit and sales decline

Pub group Mitchells & Butlers posted a drop in pre-tax profit for the 52 weeks ended 24 September as like-for-like sales fell and total revenue declined.

Pre-tax profit fell to £94m from £126m the year before on total revenue of £2.09bn, down from £2.1bn. Meanwhile, like-for-like sales were down 0.8%, although trading in the most recent eight weeks has picked up, with LFL sales up 0.5%.

The company declared a final dividend of 5p per share, unchanged from the previous year.

Adjusted earnings per share fell by 2.2% to 34.9p, reflecting the lower total sales and a weaker margin in the second half after the introduction of the National Living Wage.

Mitchells & Butlers highlighted increasing competition, noting that in the year to June 2015, there were over 1,700 net restaurant openings, which is broadly the equivalent of its own business in terms of outlet numbers.

“This provided us with many new local competitors and impacted our mid-market brands in particular, as a number of these openings were close to our own high-quality trading locations.”

However, since then the rate of openings has slowed significantly, mostly due to cost headwinds such as the introduction of the National Living Wage, M&B said.

With net restaurant openings now broadly flat year-on-year, the group said it has “an opportunity to win back market share”.

Chief executive Phil Urban said: “During the year we have made good progress in our three priority areas: building a more balanced business; instilling a more commercial culture; and driving an innovation agenda. This focus is starting to have a positive effect on our sales, with improved performance against a subdued market in recent months through continuation of the momentum we saw start in the second half of last year.

“Sales growth in the first eight weeks was impacted by the Rugby World Cup in the prior year, but I'm encouraged by the underlying momentum which has seen recent weeks return to the levels seen in the summer.”

At 1000 GMT, the shares were down 4.4% to 261.50p.