Monday 23 April 2018

M&B shares sink as firm predicts challenging time in UK pub trade

John Mulligan

Shares in UK pub-chain Mitchells & Butlers sank in early trading yesterday after it said the business will remain under pressure during the second half of the year and an expected resumption of dividend payments failed to materialise.

Its operating margin for the period was also less than analysts expected.

Irish horseracing tycoons John Magnier and JP McManus own a combined 19pc stake in Mitchells & Butlers (M&B) via their Elpida investment vehicle. Former Superquinn boss Simon Burke is also a non-executive director on the board.

Despite the stock retreating, analysts were reasonably happy with M&B's first-half results, which showed, stripping out recent disposals, that sales in the period to the beginning of April were 4.2pc higher at £912m (€1bn) and earnings before interest, tax, depreciation and amortisation were 1pc up at £194m.

Interim chief executive Jeremy Blood said that for the first time in the group's history, food sales outpaced those of drinks. Three-quarters of its revenue is now derived from food, he added, with food sales having risen 7.5pc in the first half.

Despite a reasonably decent performance, M&B warned that challenges lay ahead for the group in respect of input cost inflation from food and energy, in addition to uncertainty surrounding discretionary consumer spending in the UK.

It will be raising prices for food at its pubs to recoup higher costs.

Among the pub names operated by M&B are O'Neill's and Harverster. It has a total of about 1,600 outlets in its estate.

M&B is still looking to appoint a new chief executive after its former incumbent, Adam Fowle, announced in March that he was relinquishing the role. Shares in the company closed down 5.1pc at £3.19.

Irish Independent

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