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Mitchells & Butlers Plc Pre-Close Trading Update - Conference Call - Final.

Article Excerpt
OPERATOR: Thank you for standing by and welcome to the Mitchells & Butlers' trading update conference call. At this time all participants are in a listen-only mode. There will be a presentation followed by a question and answer session. (Operator Instructions). I must advise you that this conference is being recorded today Tuesday September 23, 2008.

I would now like to hand the conference over to your speaker today, Tim Clarke. Please go ahead sir.

TIM CLARKE, CHIEF EXECUTIVE, MITCHELLS & BUTLERS PLC: Good morning everybody and thanks for joining the call. I'm here with Jeremy and we'll be very happy to try and answer your questions shortly. I hope you've had a chance to read our pre-close statement which covers 51 weeks, and reports specifically on the last nine weeks up to last Saturday, September 20.

We're pleased to be reporting a further small improvement in the trend of same outlet like-for-like sales growth to 1.3% for the most recent nine weeks' trading. This has been achieved against the background of some very challenging trading conditions with weakening consumer confidence and further volume declines of some 9% in the on-trade beer market over the past quarter.

The key factors in this performance are the long-term repositioning of the M&B business towards food sales; the consistent investment in amenity standards and staff service training; the consumer appeal of our formats; and the effectiveness of our value and volume sales strategy. As a result, like-for-like food sales growth has remained strong at 3.6%, albeit slowing somewhat from the previous growth trend, while drink sales have moved back into positive territory with growth at 0.3% for the nine weeks.

Our residential pubs, accounting for 76% of turnover, have grown like-for-likes by 1.6%, reflecting strong growth from both our value formats and a good performance by our premium formats operating in more affluent areas.

By contrast, there's been a slowdown in our mid market Harvester brand which reflects the spending pressures on families with mortgages.

In the High Street, like-for-like sales were up 0.1% as a result of good growth from All Bar One, Browns and Nicholson's with their strong presence in Central London and our town pubs in the rest of the UK cities. But that was offset by some very challenging conditions for the later evening venues. Our trading strategy remains one of maximizing the cash contribution to profit from the optimal combination of volume, price and mix in a value-sensitive market. This includes the efficiency benefits of volume gains through enhanced productivity and purchasing gains.

We've also successfully reduced fixed and variable operating costs during the year by over GBP20 million and achieved our highest ever growth in staff productivity of some 5.1%. As a result of this tough cost management action, despite all the regulatory and input cost pressures, we now expect the net retail operating margins will only be slightly reduced for the year. Overall earnings for the year, before exceptionals, are expected to be in line with the Board's expectations.

The profitability of the sites acquired from Whitbread in 2006 have significantly increased and we remain on track to achieve the targets announced at the time of acquisition. The further 44 sites recently acquired from...

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