M&B looks to cut costs

Pub group Mitchells & Butlers (M&B) is investigating ways to cut costs, including selling some of its assets, after warning that it expected “significant declines” in beer and food sales in 2009.

Unveiling full year losses of £238m, the All Bar One and Harvester owner also said it was scrapping its final dividend and plans to convert into a Real Estate Investment Trust (REIT)

The group said it would suspend all shareholder payments for the time being while it tried to reduce its £2.7b debt.

The move to scrap REIT plans followed the Chancellor’s announcement, in the Pre-Budget Report, of new rules to prevent companies that were not pure property investment businesses converting to avoid tax.

M&B said it remained “highly cautious” on the outlook for consumer spending in 2009, and expected significant declines in beer and food sales

But with food and beer pricing at the value end of the market, the group expects a resilient performance “amidst what are set to remain very difficult trading conditions.”

Highlights (for the 12 months to 27 September)

• Sales up 0.7% to £1.9b.
• Earnings Before Interest, Taxes, Depreciation and Amortisation rose 1.1% to £477m
• Operating profits were flat at £344m.
• Pre-tax profits fell by more than 13% to £179m – partly because of the failed property joint venture with entrepreneur Robert Tchenguiz.
• Due to charges on property movements, the company reported a wider pre-tax loss for the year, up from £48m to £238m
  

Mitchells & Butlers sees food sales rise as beer volumes drop >>

M&B confirms sale of Tchenguiz's 25% stake >>

Board at Mitchells & Butlers under fire after £274m loss >>

Rising costs threatens profits growth at M&B >>

Mitchells & Butlers unveils REIT plans >>

By Daniel Thomas 

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