M&B posts pre-tax loss as 1,300 workers made redundant

26-Nov-2020 - Last updated on 26-Nov-2020 at 10:58 GMT

Uncertain and challenging year: 'With our great estate, balanced portfolio of brands and proven management team, we remain optimistic that we will be able to regain the momentum previously built', M&B's Phil Urban explained

Birmingham-based pub group Mitchells & Butlers (M&B) has revealed a £300m swing from pre-tax profit to loss in the 52 weeks ended 26 September 2020 – a period in which it was forced to axe 1,300 staff members.

The operator of more than 1,700 pubs under brands including Harvester, Toby Carvery, O'Neills and All Bar One reported a 34.1% drop in revenue – which totalled £1,475m compared to £2,237m in 2019 – alongside a pre-tax loss of £123m versus a profit of £177m during the previous financial year.

This includes a 3.5% dip in like-for-like sales during the same 52-week period.

What’s more, the FTSE 250 group revealed that it laid off in the region of 1,300 staff during the same period which, alongside other cost-cutting measures, saw M&B’s monthly cash burn drop from £40m to £35m.

As previously reported by The Morning Advertiser (MA), the employer of more than 46,000 people – according to its Making Moments Matters report 2019 – announced that 99% of its workforce had been furloughed in April.

As of 25 November, M&B said it had cash balances of £125m and total liquidity of £225m.

Remaining optimistic

The release of M&B’s latest results comes after the group reported a £121m pre-tax loss for the six months to 11 April.

The operator also revealed that it secured £100m as part of the Coronavirus Large Business Interruption Loan Scheme (CLBILS) in June.

What’s more, the operator’s like-for-like sales since 26 September have declined by 26.5%, with total sales over the same period down by 50.8%, a reflection of new Covid-19 restrictions.

"Throughout a very uncertain and challenging year our businesses and teams have adapted quickly, creating a safe environment for guests and putting us in a strong position to benefit when consumers are able to eat out again,” chief executive Phil Urban said of the group’s latest results.

“We saw direct evidence of this from a strong trading period in July and August before further restrictions came into force.

“With our great estate, balanced portfolio of brands and proven management team, we remain optimistic that we will be able to regain the momentum previously built and continue to achieve sustained market outperformance, when the current operating restrictions are eased."

Short term uncertainty

According to M&B’s latest figures, the group’s net debt of £1,563m has been flat across the year – compared to £1,564m during the previous financial year – rising to £2,104m including lease liabilities following the adoption of IFRS16.

What’s more, the operator of some 1,700 sites’ full property valuation and impairment review in September yielded an overall decrease in book value of £208m.

“Despite a recent strong increase in the share price as investors bank on a good recovery post vaccination rollout, plenty of uncertainty remains in the short term,” Paul Ruddy, equity analyst at specialist investment banking, wealth management and asset management firm Goodbody added.

“Particularly concerning what percentage of the estate will be put into Tier 3 in England, whereby units will only be allowed to offer delivery and collection.

“Management remains optimistic that it can build on the momentum it previously had in a post pandemic environment, and we would share this optimism.”