2nd Feb 2006 07:01
Mitchells & Butlers PLC02 February 2006 2 February 2006 MITCHELLS & BUTLERS PLC AGM TRADING UPDATE At the Annual General Meeting to be held at 11am this morning, Roger Carr,Chairman, will make the following comment on the Company's trading for the first16 weeks to 21 January 2006 of the current financial year: "I am pleased to announce that our strategy has continued to drive strong marketshare gains and to deliver good sales growth amidst more difficult tradingconditions. In the first 16 weeks, same outlet like-for-like sales were 4.0%ahead of the comparable period last year. Sales growth benefited particularlyfrom strong trading in the week before, and the week after, Christmas as well asa modest uplift from the introduction of extra licensed trading hours. Overalltrading is in line with our expectations. In residential areas, which account for 70% of the business, same outletlike-for-like sales were up 4.7%, 2.5% on an uninvested basis. Same outletlike-for-like sales on the high street which account for 30% of the businesswere up 2.8%, 2.2% on an uninvested basis. Overall, uninvested like-for-likesales were up 2.3%. Total retail sales were 3% ahead of last year, led by strong growth in foodsales, up 5%. Drinks sales performed well in a weak on-trade beer market andwere up 2%. The average price of food and drink during the period was up by approximately 1%compared to last year. Gross margins were slightly reduced primarily as a resultof the faster growth in the lower margin product categories of food and winewhich now account for approximately 40% of sales. This trend, together with theestimated regulatory and energy cost increases of some £25m this year willcontinue to put pressure on net operating margins. We have been preparing for legislation on smoking, banning it at the bar,reducing the smoking areas available and improving our food offers and theattractiveness of the outside trading areas. We believe that the industry'svoluntary commitment to a progressive removal of smoking was the best approachto this issue. However, there are now two alternatives before Parliament: eitherthe retrograde, food based ban proposed in the Health Bill, which wouldincentivise large numbers of pubs, mostly in less affluent areas, to remove foodand revert to a smoking and drinking offer only; or a full ban with noexemptions. We believe that the level playing field outcome of a full ban wouldbe much the better of the two alternatives, rather than an unworkable compromisewhich has little prospect of providing a lasting solution. We remain prepared for either eventuality and believe that we are wellpositioned competitively to overcome the impact of the legislation, after theinevitable, initial period of disruption, and maximise the opportunity of attracting new, eating-out customers to our pubs. Cash generation from the business remains strong and we are intent on continuingto deploy our cash resources in the best interests of shareholders, throughreinvestment for high returns, value creative acquisitions or return by way ofdividend and share buy-back. The Board remains committed to the maintenance ofan efficient balance sheet. The buyback programme of £100m announced in Novemberis underway with £18m of shares repurchased to date. The additional pensioncontribution of £20m committed for the current year has been made. We remain cautious on the outlook for consumer spending but we are confidentthat we can make further market share gains through our focus on offering valueand choice for customers, together with high levels of amenity and service. Webelieve that this strategy, combined with our economies of scale and thecontinued investment we are making to develop our estate, will help us tomitigate the external cost pressures that the business faces and generatefurther growth in earnings and cash returns as the year progresses." For further information please contact: Investor Relations:Erik Castenskiold 0121 498 4907 Media:Simon Ward 0121 498 5795James Murgatroyd (Finsbury Group) 020 7251 3801 Notes for editors:- Same outlet (invested) like-for-like sales include the sales performance for the comparable period of all managed pubs that were trading for the two periods being compared. 95% of the estate is included in this measure.- Uninvested like-for-like sales include the sales performance for the comparable period of those managed pubs that have not received expansionary investment of more than £30,000 in the two periods being compared. 88% of the estate is included in this measure.- Mitchells & Butlers owns and operates around 2,000 high quality pubs in prime locations nationwide. The Group's predominantly freehold, managed estate is biased towards large pubs in residential locations. With around 3% of the pubs in the UK, Mitchells & Butlers has 10% of industry sales, and average weekly sales per pub of over three times the industry average. Cautionary note regarding forward-looking statements This announcement contains certain forward-looking statements as defined underUS legislation (Section 21E of the Securities Exchange Act of 1934) with respectto the financial condition, results of operations and business of Mitchells &Butlers and certain of the plans and objectives of the board of directors withrespect thereto. These forward-looking statements can be identified by the factthat they do not relate to historical or current facts. Forward-lookingstatements often use such words as 'anticipate', 'target', 'expect', 'estimate','intend', 'plan', 'goal', 'believe' or other words of similar meaning. Theforward-looking statements contained herein are based on assumptions andassessments made by Mitchells & Butlers' management in light of their experienceand their perception of historical trends, current conditions, expected futuredevelopments and other factors they believe to be appropriate. By their nature,forward-looking statements are inherently predictive, speculative and involverisk and uncertainty, and there are a number of factors that could cause actualresults and developments to differ materially from those expressed in or impliedby such forward-looking statements. These factors include, but are not limitedto: the future balance between supply and demand for Mitchells & Butlers' sites;the effect of economic conditions and unforeseen external events on Mitchells &Butlers' business; the availability of suitable properties and necessarylicenses; consumer and business spending, changes in consumer tastes andpreference; levels of marketing and promotional expenditure by Mitchells &Butlers and its competitors; changes in the cost and availability of supplies;key personnel and changes in supplier dynamics; significant fluctuations inexchange rates; interest rates and tax rates; the availability and effects ofany future business combinations, acquisitions or dispositions; the impact oflegal and regulatory actions or developments; the impact of the EuropeanEconomic and Monetary Union; the ability of Mitchells & Butlers to maintainappropriate levels of insurance; the maintenance of Mitchells & Butlers' ITstructure; competition in markets in which Mitchells & Butlers operates;political and economic developments and currency exchange fluctuations; economicrecession; management of Mitchells & Butlers' indebtedness and capital resourcerequirements; material litigation against Mitchells & Butlers; substantialtrading activity in Mitchells & Butlers' shares; the reputation of Mitchells &Butlers' brands; the level of costs associated with leased properties;competition for high quality managers; declining sales of beer in pubs in theUK; food safety scares; funding liabilities in respect of the Group's pensionschemes and the weather. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Mitchells & Butlers