Mitchells Posts First-Half Profit of $74.3 Million on Higher Sales of Food
Mitchells & Butlers Plc, the U.K. pub owner that had a board shakeup in January, said it posted a fiscal first-half profit as food sales climbed and finance charges declined.
Net income was 52 million pounds ($74.3 million), or 12.7 pence per share, in the 28 weeks ended April 10, compared with a 6 million-pound loss, or 1.5 pence, in the year-earlier period, the Birmingham, England-based company said in a statement today.
In March, Mitchells said it would focus on six food- oriented brands, including Harvester and Toby Carvery, and expand into retail parks and other high-traffic locations. Food sales at outlets open at least a year gained 4.3 percent in the 33 weeks ended May 15, the company said today.
“We’re not seeing any dip in confidence,” Chief Executive Officer Adam Fowle said in a telephone conference call. “It’s remained remarkably resilient.”
A possible increase in value-added tax under Britain’s new coalition government could darken consumer mood, he said. Government employees also may start worrying about their jobs as spending cuts start, he said.
Mitchells wants to gauge consumer confidence after a new budget is announced in June, plus refinance its bank debt before it decides whether to reinstate dividends, Fowle said.
Mitchells rose 2.7 pence, or 0.9 percent, to 306.1 pence at 9:26 a.m. in London. The shares have increased 23 percent this year, giving the company a market value of 1.25 billion pounds.
Advertising campaigns such as Toby Carvery’s Great British Roast Debate helped bring in diners, the company said. Mitchells is looking to sell about 300 drinks-oriented budget outlets, while it expands the food-focused chains, Fowle said. Talks are at early stages, he said.
Because of its food focus, Mitchells will probably see no gain from soccer’s World Cup, Fowle said. When England plays, customers tend to go to drinks-focused pubs, and when other teams play, they usually stay home and drink supermarket beer, he said.
Mitchells reviewed operations after billionaire Joe Lewis won support to replace part of its board. Last year, the company took charges to close interest-rate swaps linked to a failed property venture involving entrepreneur Robert Tchenguiz. First- half finance costs narrowed to 83 million pounds from 148 million pounds, the company said today.
Net debt narrowed by 87 million pounds to 2.5 billion pounds, the company said.