M&B sees sales lift but profits slide

Rising consumer confidence since the start of August has helped Mitchells & Butlers report improved sales across 2009, but profits are still down.

Like-for-like sales in the year to 26 September were up 1.6%, and 3.2% in the eight weeks to 21 November, according to the annual report from the managed operator.

Revenues for 2009 were up 2.6% to £1.958m. But operating profits fell 12.5%, with the company citing increased energy and food costs, plus regulatory burdens such as duty and the minimum wage.

Profit before tax and exceptional items was down 23.9% to £134m, EBITDA fell 10.3% to £428m and adjusted earnings per share slid 23.9% to 23.6p.

Chief executive Adam Fowle said: "Mitchells & Butlers' performance has improved through the 2009 financial year.

"This is a consequence of the effective implementation of our value and volume strategy together with rising consumer confidence since the start of August which has resulted in a sales increase and a recovery in the trend of net margins in the second half."

He said lower energy costs and reduced pressure on margins in the second half of the year meant margin and profit decline "significantly reduced".

Fowle said the new financial year had "started well" helped by a "recent small upturn in consumer confidence".

"Inflationary cost pressures are currently more stable and less severe than last year," he added. Total regulatory and inflationary costs in the full year expected to increase by around £20m, including £10m of energy cost savings.

In addition, around £20m of savings had been produced by infrastructure changes, Fowle said.

But he warned that disposal income and consumer confidence could be "dampened" if VAT and other taxes were to rise.

Across the full year, drink sales were up 1.8%. food increased 3.1%. Sales in residential sites were up by 2.5%, while the high street saw a 0.2% rise.