Mitchells & Butlers H1 Pre-tax Profit Up As Revenue Rises

(RTTNews) - Mitchells & Butlers Plc. (MAB.L, MLB), an operator of managed restaurants and pubs, Thursday reported increased profit before tax for the first half of the year, as revenues rose, supported by growth in like-for-like sales as well as contribution from new pubs and restaurants.

Profit before tax rose to 75 million pounds from 68 million pounds in the prior year. Prior-year results have been restated.

There were no exceptional items in the period and 4 million pounds of pre-tax exceptional charges were recorded in the first half of 2014. Adjusted profit before tax was 72 million pounds last year.

The company, whose pubs include Harvester and Toby Carvery, said earnings per share advanced to 14.2 pence from 12.9 pence.

Revenue improved 9.5 percent to 1.113 billion pounds from 1.016 billion pounds in the prior year, supported by growth in like-for-like sales and the contribution of new pubs and restaurants. This includes contribution from the 173 outlets acquired from Orchid on June 15, 2014.

Total like-for-like sales in the first half rose 1.7 percent, with growth in both food and drink sales. Food sales growth was primarily driven by volume growth of 2.9 percent, with a small rise in average spend per head.

Meanwhile, Drink sales growth was due to higher average spend growth of 2.7 percent partially offset by volume declines of 2.2 percent.

Like-for-like food volume growth was 2.9 percent, compared to 0.2 percent rise last year.

Operating margin was 13.7 percent, compared to 14.5 percent last year, reflecting Orchid and volume-driven sales growth rather than spend per head.

The pub operator noted that while the additional volume generates incremental profit, the mix of products and timeslots, particularly breakfast, in which these sales are generated has led to a reduction in percentage margin.

At the end of the first half, the company's total estate comprised 1,777 managed businesses and 57 franchised businesses, in the U.K. and Germany.

Alistair Darby, chief executive, said, "The market in which we operate remains challenging despite growing consumer confidence. However, we are confident that our business is well placed to capitalise on opportunities in the market and deliver future shareholder value."

Regarding dividend, the company said its Board remains mindful of the attraction of the resumption of dividend payments and will continue to monitor expected net cash flow generation, before taking a decision on timing and quantum.

The Group has agreed that normal dividends will only be resumed provided they can initially be funded out of cashflow after bond amortisation.

The stock slipped 0.4 percent in early trade on the LSE to 445.90 pence.