Mitchells & Butlers skips annual dividend, shares tumble

By Aby Jose Koilparambil and Radhika Anilkumar

(Reuters) -British pub group Mitchells & Butlers posted on Thursday a smaller than expected fall in annual profit as input costs eased but its shares tumbled 12.5% after it declared no dividend for the year and some analysts expressed doubts about prospects for earnings growth.

The shares looked set for their biggest intra-day loss since Sept. 29, 2022 and were among the top percentage losers on the FTSE 250 index.

The owner of the Toby Carvery, Harvester, and All Bar One brands reported adjusted operating profit for the year ended Sept. 30 of 221 million pounds ($279 million), compared with 240 million pounds a year earlier. Analysts on average were expecting a profit of 216.7 million pounds, according to LSEG data.

“Getting back to profit growth isn’t assured. Sales growth so far this year has slowed a couple of percentage points as landlords head into the crucial festive season,” Hargreaves Lansdown analysts said in a note.

“And there are signs that consumers are cutting back on eating out in order to save for Christmas. With a debt pile of over 1 billion (pounds) it’s no surprise the purse strings haven’t been loosened to allow a dividend.”

Still, Mitchells & Butlers CEO Phil Urban was optimistic, saying the company aims to rebuild margins to pre-pandemic levels as energy costs fall and food inflation slows.

“We are very encouraged by the bookings we have taken so far (ahead of Christmas), and it does feel as though this could be the first pop-up Christmas since 2019 with COVID fears now hopefully behind us,” Urban said on a post-earnings call.

Mitchells & Butlers said its like-for-like sales rose 7.2% in the new fiscal year that started on Oct. 1, compared with 6.5% growth in the corresponding prior year period.

The company, which had tweaked its menus last year to tackle high costs, said it expects overall annual costs to decrease to about 65 million pounds ($82.5 million) from 175 million pounds, underpinned by a reduction in energy prices and slowing food inflation.

($1 = 0.7880 pounds)

(Reporting by Radhika Anilkumar and Aby Jose Koilparambil in Bengaluru; Editing by Sherry Jacob-Phillips and Emelia Sithole-Matarise)