Mitchells & Butlers sees sales hike in first half of year

By John Harrington

- Last updated on GMT

Related tags: Like-for-like sales, Profit

Mitchells & Butlers reported positive results for the past six months
Mitchells & Butlers reported positive results for the past six months
Mitchells & Butlers (M&B) has this morning reported a 1.1% increase in like-for-like sales for the 28 weeks to 12 April 2014 and said that its performance had been underpinned by a turnaround in volume performance.

The group’s total revenues increased by 2.5% to £1.016bn, as a result of growth in like-for-like sales as well as the contribution from new pubs and restaurants.

The company said that whilst both food and drink sales were supported by price increases, food sales returned to volume growth of 0.2% in the first half. Drink volumes declined by 0.3%.

In the 11 weeks to 12 April, total sales were down 0.3%, as a 1.5% decline in food sales offset a 1.2% rise in drink sales.

Late Easter

The like-for-like sales increase slowed in the latter part of the period, although the company said that comparison in this period was impacted by Easter falling in the first half of last year. Like-for-like food volume growth was up 0.2% ( H1 2013: -4.7%), while drink volume stabilised down 0.3% (H1 2013: -6.0%).

Adjusted operating profit rose 2.1% to of £147m while adjusted earnings per share stood at 14.6p, up 1.4%.

The company said it had reached an agreement with Trustees on a 2013 pension valuation. Deficit increased to £572m as at March 2013; annual contribution increased to £45m (previously £40m per annum).

Capital expenditure during the period increased to £86m (H1 2013: £59m), including 11 new site openings and 4 conversions, while net debt stood at £1.7bn representing 4.1 times annualised EBITDA.

Infrastructure

Total capital expenditure in the first half was £27m higher than the prior year. Of this amount, £58m was spent on maintenance and infrastructure projects. This includes the group’s significant IT project to upgrade all pub and restaurant EPOS systems. The project rollout is due to be completed during FY 2015. The expected total cost of the project is £33m, of which approximately two thirds will be capital. Other ongoing infrastructure projects include upgrades to key head office HR and Finance systems.

The company opened 22 sites during FY 2013, which contributed £2m to operating profit growth in the first half.

It said that retail staff turnover was at a historical low of 78%, a fall of 4%pts since the start of the company’s transformation plan.

Turnaround

Alistair Darby, chief executive, said: “We are pleased with our trading performance in this first half, particularly the turnaround in volumes, alongside which we have made good progress against our key priorities, and continued to position M&B for sustainable long-term future growth. Successful resolution of the recent triennial pensions valuation, which we are announcing today, provides greater visibility and certainty over future funding and cash flow, at an affordable level. Our business transformation is gaining momentum. Through our clearly laid-out strategy, we are well-placed to take advantage of the economic recovery across the UK.”

Darby said that the company is encouraged by the economic recovery that is developing across the UK.

He said: “Against this backdrop, our business transformation is gaining momentum. We have a clear strategy for the long term development of the business, which is founded on well defined operational priorities. We are confident that we will make further progress against our key performance indicators and that we are well positioned for profitable future growth.”

Related topics: Mitchells & Butlers

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