UK pub chain backed by McManus and Magnier hit by Brexit
Mitchells and Butlers reports 8 per cent drop in first-half pretax profit as margins bite
The All Bar One company logo hangs in the window of the bar near Fleet Street in London . Photographer: Carlos Jasso/Bloomberg News
UK pub operator Mitchells and Butlers, which is 23 per cent-owned by horse racing tycoons JP McManus and John Magnier, reported an 8 per cent drop in first-half pretax profit on Wednesday, as margins continued to be weighed down by rising costs.
Like-for-like sales for the 28 weeks ended April 14th climbed 1.6 per cent. On adjusted for impact of frigid weather conditions, it rose 2.5 percent, the company said. Revenue for the half-year period rose to £1.13 billion from £1.12 billion, but pretax profit slipped to £69 million from 75 million.
“Margins are being adversely impacted by increased costs, most notably from wage inflation, property costs, energy and food and drink costs,” chief executive Phil Urban said. Inflationary cost pressures will remain at similar levels through the second half and into next year, the company said.
Rising inflation and muted wage growth following Britain’s vote to leave the European Union have caused UK consumers to rein in spending. Adjusted operating profit for the first half of the year fell over 5 per cent, mainly due to bad weather conditions. Like-for-like sales grew 5.8 per cent over Easter weekend, said the group, which operates over 1,800 pubs, bars and restaurants and whose brands include All Bar One, Harvester, Toby Carvery and All Bar One, Nicholson’s and O’Neill’s.
Separately, the company’s peer Marston’s forecast revenue and profit growth this year as it posted a 20 per cent rise in underlying revenue for the 26 weeks ended March 31st, driven by strong trading in its pubs. Marston’s shares were down over 2 per cent while Mitchells & Butlers stock was down over 3 per cent. - Reuters