Managed pub company Mitchells & Butlers has reported a "robust" performance in challenging conditions for the year to 26 September. Like-for-like sales were up 1.6% and total revenue up 2.6%. Operating profits down 12.5% to £300m reflecting £54m of regulatory and inflationary cost pressures.
Its second-half retail operating profits down 2.4% compared with first half down 16.8%. Current trading shows an improving trend with like-for-like sales up 3.2% in the eight weeks to 21 November.
Adam Fowle, chief executive, said: "Mitchells & Butlers has produced a robust operational performance in challenging conditions. The Company has sold 129 million meals in the year and grown average food sales per pub by 9%. The second half trend in net profit margin recovery continues.
"The first eight weeks of the new financial year have started well and the strength of the Group's brands, locations, operational skills and cost management mean that we are well positioned for the year ahead."
The company said like-for-like food and drink sales were up 3.1% and 1.8% respectively in the year, a strong performance given the declines currently experienced in both these markets. In volume terms, this represents an outperformance of the eating-out and the on-trade beer market by 10% points and 6% points respectively. Gross margins were 1.5% points lower than last year on an improving trend.
Second half margins were 0.9% points down, compared with 2.0% points in the first half, as a result of sales increasing and duty and food inflation reducing.
Across both halves, 0.7% points of this decline was caused by the disposal of the high gross margin lodges and the increase in food sales mix which has slightly lower margins than drink.
The company added: "This financial year has been affected by an abnormal level of cost increases which particularly impacted the first half of the year. £30m of additional regulatory costs related to the National Minimum Wage, holiday pay, business rates and exceptional duty increases with an additional £24m of food and energy cost inflation. "Against these increases, our focus on cost management has resulted in £20m of savings with productivity improvements in staff contribution per hour of 5.2% achieved in the year along with gains from menu development, waste reduction and energy efficiency.
As a result of these factors, retail operating margin fell by 2.2% to 15.3% with a second half margin of 17.2%, down 1.1% points against the same period last year. This led to retail operating profits down 9.6%, with the first half down 16.8% and second half 2.4% lower."