M&B expects to overcome tough conditions

It has made a good start to its new financial year, after its trading performance was boosted by mild weather.

The company, which rejected two bid approaches from billionaire currency trader Joe Lewis earlier this year, posted full-year adjusted profit before tax down 7.7 per cent but in line with forecasts.

M&B, which runs around 1,600 restaurants and pubs across Britain and whose chains include Harvester and Toby Carvery, said the profit had come from sales on a like-for-like basis up 2.6 per cent, with food sales on the same basis up 4.8 per cent.

The company, whose chains also include All Bar One and O’Neills, said it had started the 2012 financial year well, with like-for-like sales up by two per cent in the first eight weeks of the year, which it said had been helped by mild weather.

Bob Ivell, executive chairman, said the results showed the group was resilient, despite a difficult year with a tough consumer environment, board changes and a takeover approach.

“Mitchells & Butlers is a good business and our ambition is to make it a great business,” he said. “We have a number of initiatives in place to do this including the simplification of our central support functions to enhance business performance.

“Overall, this gives us confidence in successfully growing the business in the year ahead.”

Mr Lewis, who remains the company’s biggest shareholder with a stake of 24 per cent, abandoned plans to take over the business in October, citing M&B’s weak trading and volatile market conditions.

M&B rejected both approaches from the Tottenham Hotspur owner, the second of which was pitched at 230 pence per share and valued the business at £940m.

M&B in September reported slowing sales growth and said the consumer environment remained challenging with conditions compounded by cost pressures in energy, duty and food.

Full-year pre-tax profit came in at £156m, compared with market expectations which ranged between £141m and £162m, with the average forecast standing at £154m, according to a Thomson Reuters I/B/E/S poll of 18 analysts.

M&B scrapped dividend payments in 2008 in order to pay down debt. It said it would continue to monitor operating cash flow generation and capital investment opportunities before taking a decision on the resumption of payments.