Irish-backed UK pub group Mitchells and Butlers has reported a drop in annual profit and has warned Brexit could impact on staff costs and its ability to increase employee numbers.
The group owns pub chains such as the Irish-themed O’Neill’s, All Bar One, and family restaurant chain Harvester. It is heavily backed by Irish financiers John Magnier and JP McManus.
Through their Elpida investment vehicle, the two businessmen own a combined 23.42% of the group and rank as its second largest shareholder behind billionaire businessman Joe Lewis’ Piedmont investment business, which holds a 26.74% stake.
For the year to the end of September, Mitchells and Butlers said that, although growth was evident in the second half, adjusted operating profit fell by 1.6% to £303m (€342m), while adjusted earnings per share fell by almost 1% to 34.1p.
However, full-year like-for-like sales rose by 1.3% and the group said first-half profitability was negatively impacted by harsh weather. Management said that like-for-like sales in the first seven weeks of the group’s current financial year have grown by 2.2%.
However, it warned on Brexit, saying the impact of the UK’s exit from the EU remains uncertain, but could hamper it with regard to rising labour costs and constrained availability of workers.
“Aside from macro-economic consequences, the specific areas of material impact for our business are increases in costs and reduction of availability of goods, and implications of restrictions on the free movement of labour.
“On exit of the EU, cost of goods would be impacted by changes in terms of trade and, therefore, tariffs, additional border controls and fluctuations in the value of sterling. From an employment perspective, at a time when unemployment levels are at a 40 year low, any restriction on the free movement of labour would have a material impact on both the cost of labour and access to talent,” management said.
In its various brands, 13% of Mitchells and Butlers staff are non-British EU nationals. The group employs 44,000 people in its core UK business and pub business in Germany.