JDWPY J D Wetherspoon Plc (PK)

U.K. pub group Mitchells & Butlers PLC (MAB.LN) Thursday said it swung to a full-year net profit from a net loss last year, helped by food sales and strong brands, but said the outlook for the second half is uncertain.

Current trading is improving: there has been a recent small improvement in consumer confidence and like-for-like sales were up 3.2% in the eight weeks to Nov. 21, the company said, adding that it has been hit by a wave of inflationary cost pressures, but offset some of that through cost management.

The owner and operator of 2,000 pubs in the U.K. reported a net profit for the 12 months to Sept. 26 of GBP4 million after a net loss of GBP176 million a year ago.

Food comprises around 41% of sales, and food-related sales make up 65% of the total. Average food sales were up 9% year-on-year.

Chief Executive Adam Fowle said the company's food business benefits from economies of scale, sharp price points, good pub brands and retailing skills.

He said the second half of the year is difficult to read, especially due to the expected U.K. general election due next year, and any possible tax rises a new Chancellor of the Exchequer might introduce.

The company sees net debt reducing further by GBP100 million in the next year. It had GBP72 million in disposals during the year, which helped reduce net debt by GBP135 million to GBP2.6 billion.

On the acquisition front, management also said it's interested in "big suburban pubs and pubs in smart areas." M&B is building two new pubs this year and four next year, and is looking for acquisitions.

Pretax profit for the year before exceptional items fell 24% to GBP134 million from GBP176 million, but still beat market expectations which hovered around GBP125 million.

Full year revenue rose 2.6% to GBP1.96 billion.

M&B owns pub chains such as All Bar One, O'Neill's traditional Irish pubs, Crown Carveries and Harvester.

Operators who manage their own pubs, such as M&B and J.D. Wetherspoon PLC (JDW.LN), are much better equipped to deal with the downturn than those who lease their pubs to individual landlords like Enterprise Inns PLC (ETI.LN)and Punch Taverns PLC (PUB.LN), due to their direct control of prices and costs.

At 0805 GMT, M&B shares were up 2.5% or 6 pence at 263 pence in a broadly lower London. The company's resilient 2009 performance has seen its shares gain almost 80% since the turn of the year, though they're still only half the level they were two years ago.

 
  Company Web site: http://www.mbplc.com 
 

-By Quentin Fottrell, Dow Jones Newswires; +353-1-676-2189; quentin.fottrell@dowjones.com

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