Tim Clarke resigns as Mitchells & Butlers boss

Tim Clarke has resigned as chief executive of Mitchells & Butlers (M&B), to be temporarily replaced by Adam Fowle, currently the group's chief operating officer.

Clarke's departure from the UK's largest managed pub company was announced as the group reported half year pre-tax profits down nearly 50 per cent at £44m and operating profits down 17 per cent at £139m, impacted by £43m-worth of what it called "regulatory and inflationary cost pressures".

Turnover for the 28 weeks to April 11, 2009, rose 2.9 per cent to £1,024m. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 13.3 per cent to £209m.

Like-for-like sales in the 16 weeks since the half year point have risen 1.5 per cent, the group said.

M&B said there were signs that cost pressures were easing, although the outlook for consumer spending looked set to remain weak for the rest of 2009.

"In our markets, we have recently been seeing some signs of slowing in the previous rates of decline. However, customers remain cautious and value sensitive and any recovery prospects from improved levels of disposable income appear to be being offset by rising levels of unemployment.

"The severe input cost increases that have had to be absorbed in the first half are now lessening. Energy costs are anticipated to be £5m lower in the second half compared with last year, while inflation in our food costs is expected to fall to around three per cent. These factors combined with the recent improvement in trading performance should reduce the level of pressure on second half net operating margins."

Speaking of Clarke's departure M&B's chairman Drummond Hall noted the factor of the interest rate swap that had been related to a property joint venture two years ago with then-major M&B shareholder Robert Tchenguiz.

Hall said: "The board has decided to close the residual element of the swap, most of which was dealt with in January 2008. A new facility has been negotiated to provide additional headroom and the Company's financial position is sound. In these circumstances, it was with great regret that the board has accepted the resignation of Tim Clarke.

"He has been the architect of the company's success since it was created in 2003 and we are grateful for his outstanding contribution."

Hall said a replacement was being sought but that meanwhile Adam Fowle, M&B's chief operating officer, "will step up on an acting basis. Amidst intense recessionary pressures, we have delivered robust sales growth, unprecedented market share gains and substantial cost efficiencies which have helped us to successfully withstand a period of high input cost inflation.

"Our priorities remain to continue to outperform and to generate cash."

Clarke's departure comes nearly two years after the proposed joint venture with property tycoon Tchenguiz collapsed, leaving M&B with hedging losses on a financial arrangement linked to the deal numbering hundreds of millions of pounds.

At the time M&B's then-finance director Karim Naffah resigned, and Clarke also offered his resignation, which was declined by the group's board.

Clarke became M&B's CEO on its separation from Six Continents in 2003, having held the same position at that comapny. Between 1995 and 2000 he was chief executive of Bass Leisure Retail, which now constitutes the business of M&B.