Mitchells & Butlers (M&B) has pledged to become a more competitive, balanced and innovative business, after it announced strong earnings growth, and the resumption of the dividend at its full year results.
The pub group, which operates brands including Sizzling Pubs, Ember Inns, Nicholson’s and O’Neills, reported that total revenue was up 6.6% to £2,101m for the 52 weeks ended 26 September 2015, with like-for-like sales growth of 0.8%. Adjusted operating profit stood at £328m, up 4.8%, while profit before tax was £126m, up from £123m in 2014. A final dividend of 5p was recommended.
Capital expenditure was level with 2014 at £162m, including 14 new site openings and 51 conversions. Net debt stood at £1.87bn representing 4.3 times annualised adjusted EBITDA.
Chief executive Phil Urban said: 'In the last year we have increased our earnings by 9.5%, and I am delighted to announce the resumption of the dividend.
'Since joining Mitchells & Butlers in January I have seen first-hand the potential within the business. The market remains highly competitive but I have identified our key priorities to realise that potential. We will build a more balanced business; instil a more commercial culture; and increase the pace of execution and innovation. We are confident that with this approach we will drive sustained profit growth and enhanced shareholder returns.'
However, Urban conceded that like-for-like numbers for the start of the current financial year had been disappointing. M&B needs to reassess its estate and brand portfolio to remain competitive in a fast moving market, he said. The company had invested too little time on product development and is behind the digital curve.
Pledging to reinvent the business and its brands, Urban said: 'New innovative concepts in the market are all competing for the same leisure pound. And while they may not survive in the long term, for the moment they give established businesses a run for their money.'
He added the business was over-exposed in some segments and under-represented in others. The company is now working on achieving a greater balance of brands, and expanding entry into some more premium segments, especially with the roll out of its up-market steakhouse offer, Miller & Carter.
The offer across more mature brands such as Harvester will be upgraded to ensure consistency and better branding across all outlets. The integration of the Orchid estate – which it purchased in June 2014 – was on-track, it said, with 41 completed conversions and the closure of the Orchid head office.