The top man at Mitchells and Butlers has come out fighting and predicted major market share gains for the Birmingham pub group – despite a huge profits slump.
Tim Clarke, chief executive of M&B, talked up prospects for the group just months after an abortive property deal had racked up nearly £400 million in losses.
A disastrous hedging operation on a property-based deal with Iranian entrepreneur Robert Tchenguiz wiped out two years of group profits for the Birmingham-based company, which owns and operates around 2,000 pubs.
The onset of the credit crisis led to the deal being scrapped, leaving M&B with huge losses on the terminated hedge deal.
But, in an interview, Mr Clarke said he had no regrets over the proposed deal with Mr Tchenguiz.
“Had we been able to pull it off, we would have returned over £3 a share in cash to our shareholders in July of 2007. What I do regret was that we got exposed to the hedges and that we took the advice, which was a mistake, to keep the hedge open.”
Mr Clarke suggested that another property deal with the Iranian entrepreneur was now unlikely.
“The structures that we were looking at 18 months, two years, ago are simply not implementable.”
He said M&B was now focusing on repaying debt and gaining further market share from its rivals.
“The company has made some of its biggest market share gains in previous recessions and I don’t expect things to be different this time around.”
Mr Clarke had offered to resign over the hedge fund losses but the move was blocked by the board.
Mr Clarke revealed M&B would be interested in buying Spirit, the managed pub business of Staffordshire-based Punch Taverns, if it came on the market.
“After the profit declines that business has gone through over the last couple of years, the opportunity for us transforming the profitability is very clear.”
Last week M&B announced pre-tax profits of £179 million, down 13.5 per cent on a year earlier.
The group is suspending dividend payments and limiting expansion as part of efforts to reduce borrowings.