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Mitchells and Butlers battered by snowy weather and rising costs

Pub group Mitchells & Butlers suffered at the hands of the 'Beast of the East' weather front in March, with boss Phil Urban estimating that the inclement conditions took ?12m of potential sales off its top line.
Rising costs also took their toll, pushing the company’s pre-tax profits down 8pc to ?69m for the six months to March 31 as sales remained flat at ?1.1bn.
Shares in the company fell as much as 10pc in early trading but later recovered some of the dip to reach 257p. Mr Urban said he thought the “reaction was definitely overdone”, adding that he was pleased with how the company had performed in the tough conditions.
“We had two and a half years where sales were declining and profits were going backwards,” he said.
“We’ve now produced 21 months of sales better than the market average and the next milestone is to stabilise profits, which is something we would have done had it not been for the snow.”
Mitchells & Butlers
Micthells & Butlers has now converted 100 sites into Miller & Carter steak restaurants, which continue to perform well.
The company did not pay an interim dividend, as previously announced, and is still yet to decide if it will pay one at the end of its financial year in September.
Meanwhile rival operator Marston’s said it would keep buying land for future pubs in spite of curtailing its immediate expansion plans in the face of tough trading conditions.
Boss Ralph Findlay said he would amass between 15-20 plots of land a year even though he is now only planning to build 15 new sites in 2019, a slight cooling of the pace of growth this year.
“The market has become somewhat less competitive [which] means we can get more choice over better quality sites if we see them,” he said.
Mitchells and Butlers battered by snowy weather and rising costs

Marston's chief executive Ralph Findlay says he has not engaged in the aggressive discounting seen across the broader industry

Credit:
Roy Kilcullen
The Wolverhampton-based pub chain and brewer estimates it suffered a roughly ?3m profit hit from snowy weather earlier this year, which particularly affected its rural pubs. 
None the less a strong showing in its other divisions meant group operating profits rose 4.6pc to ?74.3m for the six months to March 31.
But a revaluation of its property estate meant it had to take an accounting charge that pushed it to a statutory pre-tax loss of ?13.4m, compared to ?36.7m profit last year.
Mr Findlay said that in spite of this, the value of its estate remained at roughly ?2.2bn.
Sales at the group rose 17pc to ?529m thanks in part to the recent acquisition of brewer Charles Wells but also because Mr Findlay said he had not engaged in the widespread discounting used by some of his rivals.
“We do promote because that is part of retailing but the sector has got obsessed with 20pc off-type offers, or running deals all week, and this isn’t sustainable when bricks and mortar and labour costs are rising,” he said.
Mr Findlay added that he thought recent economic data that showed real wages had risen faster than inflation for the first quarter of the year was “positive”.
“The question is about whether it is sustainable,” he said.
Marston's shares sank 7pc in lunchtime trade to 103.90p.
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