Mitchells & Butlers profit down as revenues grow

By Gemma McKenna

Published: 25 November, 2014

Pub and bar operator Mitchells & Butlers, owner of the All Bar One and Browns venues, has seen revenues grow by 4% to £1.9 billion, while profits before tax fell by 13% to £123 million.

M&B All Bar One operator M&B saw revenues up 4% as pre-tax profits slumped 13%Chief executive Alistair Darby said the business was ‘gathering momentum’ and had made an ‘encouraging start to the year’.

In the 52 weeks to September 27,2014, the group saw like-for-like sales edge up to 0.6%, but the outlook was better in the first eight weeks of the 2015 financial year, with lfl sales up 2.4% in that period.

Operating profit before exceptionals grew 1% to £313 million.

The group, which runs around 1,700 outlets and which acquired the Orchid estate of 173 pubs in June for around £258 million, saw its capital expenditure rise 27% to £162 million as it opened 23 new sites and converted eight others.

The group reversed the trend in food sales, improving the performance from -4.3% in 2013 ro +0.9% like-for-like food volume growth this year. It also stated that operating margin stands at 15.9%, with staff turnover at a "historical low" of 78%.

Chief executive Alistair Darby, said: "In the last year we have made significant progress, investing in the business for future growth. We completed the acquisition of Orchid, accelerated remodel and expansionary capex and have made a substantial investment in our systems. At the same time we have maintained our focus on the delivery of our four key priorities. In the year ahead, we will continue these actions.

"The business is gathering momentum and we have made an encouraging start to the year. We expect to benefit further from these investments during this financial year."

Analyst Mark Brumby of Langton Capital, said: "Whilst currently off their lows, M&B's shares have performed relatively poorly this year, falling from around 490p in calendar Q1 to their current levels.

"Growth has lagged the market and M&B, despite its handily-placed London estate, has been deemed to be underperforming its peer group.

"The operator has been open and straight-forward, however, and has spotted a slowing in sales and maintained that market share growth could be the only way forward in the shorter term for a number of operators."

But he predicted we "could see the cloud under which M&B has been operating lift a little", adding that the group has "assets to die for".

Mitchells & Butlers portfolio includes Harvester, Toby Carvery, Nicholson's, O'Neill's and Ember Inns. It serves around 135 million meals and 435 million drinks each year and is the UK's largest managed pub operator.

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